Government demands $10B compensation as Binance removes Nigerian naira from P2P platform

Binance, a popular cryptocurrency trading platform, has taken the Nigerian currency, the naira, off its peer-to-peer (P2P) service. This decision comes as the Nigerian government demands $10 billion in compensation and cracks down on the crypto exchange.
In an interview with the BBC on March 1, Bayo Onanuga, President Bola Tinubu’s special adviser, revealed the compensation demand as part of an effort to stabilize the local currency. Onanuga argued that Binance could harm the Nigerian economy if allowed to continue because it sets foreign exchange rates arbitrarily.
The P2P feature of Binance allows users to trade directly with each other without involving a third party. It gained popularity in Nigeria in 2021 after the government banned the thriving crypto industry during the administration of former President Muhammadu Buhari.
The government has turned its attention to platforms that provide cryptocurrency services due to the rapid decline of the naira and the resulting high inflation rate of 29.9%. These websites have become known for trading and establishing an informal value for the naira.
Nigerian crypto users have reported difficulties accessing various crypto exchange websites, including Binance and OctaFX. Binance later set a limit on the selling price of USDT tokens on its P2P platform, making it impossible for traders to sell USDT above 1,802 naira per USDT.
However, Binance clarified that the price peg was due to an automatic system pause, contrary to speculation within the local crypto community.
Binance is facing increased scrutiny in Nigeria as the Central Bank of Nigeria (CBN) expresses concerns about suspicious fund flows through Binance Nigeria in 2023. The CBN claims that $26 billion has passed through Nigeria via Binance from unidentified sources and users.
There are also reports that two senior Binance officials have been detained in Abuja by the National Security Adviser’s office as the nation cracks down on cryptocurrency exchanges to address speculation about the naira.
Local crypto analysts are disappointed with the government’s unfriendly stance towards cryptocurrencies in addressing the nation’s foreign exchange challenges. They argue that Nigeria’s financial issues will persist if the government continues to antagonize cryptocurrencies instead of focusing on manufacturing and exporting.
Cointelegraph has reached out to Binance for comment.