DL News reported that Nigeria’s legal currency, the naira (NGN), experienced violent fluctuations on Wednesday. The authorities accused individuals of price manipulation of the U.S. dollar-naira exchange rate through cryptocurrency exchanges and called for a ban on cryptocurrencies. However, on that day, the websites of various exchanges in the country were indeed inaccessible.
Exchange accused of manipulating naira exchange rate
On the 21st, the exchange rate of the U.S. dollar against Naira (USDT/NGN) changed drastically in a short period of time. It first fell to a record low of 1,900, then suddenly rose to 1,358 within a few hours, and finally returned to 1,675 Naira. That day The maximum drop was as high as 28.5%.
USDT/NGN trading pair on Binance (21st)
Such large fluctuations have attracted the attention of local authorities, who have pointed the culprit at the cryptocurrency exchange itself, saying that it provides users with a platform for price manipulation of exchange rates.
Specifically, exchanges such as Binance have been accused of assisting in wash trading, in which people create false buy and sell orders on the USDT/NGN trading pair on Binance, causing the value of the U.S. dollar against the Naira to fall. Crash on Binance.
This behavior was alleged to have affected Nigeria’s parallel foreign exchange market, including Binance’s peer-to-peer merchants and foreign exchange exchangers, who all used the platform’s quotes for transactions.
Binance said in this regard:
Foreign exchange rates are affected by a variety of complex factors over which Binance has no influence.
Presidential Advisor: Calls for Cryptocurrency Ban
Bayo Onanuga, the country’s presidential adviser, expressed severe rebuke through X, calling on the country’s Economic and Financial Crimes Commission (EFCC) and the Central Bank (CBN) to quickly ban the operation of cryptocurrency exchanges in the country.
The Naira-Dollar manipulators
I chanced on an X post Tuesday night by one Brother Bernard @Mikael C Bernard who railed against what he called the order of the EFCC, NSA on Finance to set a cap on traders selling USD tokens for Naira equivalent.
He disclosed that token sellers… pic.twitter.com/c9YBjawJMz
— Bayo Onanuga (@aonanuga1956) February 21, 2024
The EFCC and the CBN should take action against these platforms trying to manipulate the country’s currency and ban cryptocurrencies, otherwise our currency will continue to be lost.
Users are suspected of being unable to access the exchange website
In this regard, Bloomberg reported that the Nigerian authorities are indeed starting to block cryptocurrency exchanges. Users including Binance, Coinbase and Kraken have recently stated that they were affected when entering the above-mentioned websites:
A presidential spokesman confirmed that authorities issued a directive requiring telecommunications and Internet service providers to ban access to cryptocurrency trading platforms.
Binance first responded:
We are aware that some users are experiencing issues accessing binance.com. Currently only website users are affected, while the app remains available.
Cointelegraph: Email sent by Binance to local users
It is reported that the relevant platforms have now been restored and local users can continue to use the services, but it is still unclear whether the ban has been suspended.
The Nigerian authorities and people have different feelings
Authorities take tough stance on encryption regulation
In 2021, the Central Bank of Nigeria banned banks from providing services to cryptocurrency exchanges, an order that has since been revoked.
Last year, the country’s Securities and Exchange Commission (SEC) also asked Binance Nigeria Limited to stop promoting it, citing its failure to register with the country’s authorities.
(Nigerian Securities Regulatory Commission: Binance is operating illegally in the country and will immediately stop promoting it to users)
People embrace cryptocurrencies
However, the Bitcoin/Naira exchange rate hit an all-time high in October last year, with an annual increase of 269%, seemingly due to the Naira’s ongoing sharp depreciation at the time.
It is reported that the exchange rate of the U.S. dollar against the naira has fallen by 90% since the authorities announced that they would change the exchange rate system to a floating exchange rate system determined by the market.
A previous report by the research company Chainalysis also pointed out that although the market size in Central and South Africa is small, cryptocurrencies have penetrated the market and become an important part of the daily life of local residents:
A strong example of this is Nigeria, which ranks second in the global cryptocurrency adoption index and stands out in the region with an annual growth rate of 9% in transaction volume.
This article Nigeria plans to ban cryptocurrency exchanges: Seriously manipulating the local legal currency exchange rate, the naira plummeted 28% in a day first appeared on Chain News ABMedia.