Nigeria detains Binance executives in cryptocurrency crackdown

Two senior executives at Binance have been detained in Nigeria as Africa’s most populous country tries to rein in speculation on the naira by cracking down on cryptocurrency exchanges.

The executives flew to Nigeria following the country’s decision to ban several cryptocurrency trading websites last week but they were detained by the office of the country’s national security adviser and their passports seized, according to people familiar with the matter. An adviser to the office did not immediately respond to a request for comment. Binance declined to comment.

Nigerian authorities have turned their focus to cryptocurrency websites after a rapid devaluation of the naira that helped drive inflation to an almost three-decade high of 29.9 per cent. The sites have emerged as an alternative for trading and establishing an unofficial price for the Nigerian currency. Following the detention of the executives, Binance halted trading of the naira against bitcoin and tether digital coins on its exchange.

On Tuesday Nigeria’s central bank governor, Olayemi Cardoso, named Binance at a press conference while discussing the funds flowing through crypto exchanges.

“We are concerned that certain practices go on that indicate illicit flows going through a number of these entities [crypto platforms] and suspicious flows at best,” Cardoso told reporters. “In the case of Binance, in the last one year alone, $26bn has passed through Binance Nigeria from sources and users who we cannot adequately identify,” he added.

According to Cardoso, Nigeria’s anti-corruption agency, police and national security adviser were co-ordinating an investigation into cryptocurrency exchanges. The authorities were demanding to see a list of Binance’s Nigerian users since its inception, a person familiar with the matter said.

Last week the telecoms regulator ordered telecoms companies to block access to some of the world’s largest cryptocurrency exchanges such as Binance, Coinbase and Kraken.

President Bola Tinubu’s government has been trying to attract overseas investment to boost the country’s struggling economy with a series of market-friendly reforms. These included trying to tidy up its messy system of multiple exchange rates and end its years-long currency peg. It has twice devalued the naira in eight months.

The dispute is a blow to Binance as it tries to reform its internal culture. In November the company paid $4.3bn in penalties to US authorities after pleading guilty to criminal charges related to money laundering and violating international sanctions rules.

Its former chief executive, Changpeng Zhao, also pleaded guilty to a criminal charge related to money laundering and resigned from his position.

Last week Bayo Onanuga, a special adviser to Tinubu, said Binance was “blatantly” setting the exchange rate for Nigeria and hijacking the central bank’s role as the currency rate setter.