Nigeria Plans to Shut Down Cryptocurrency Exchanges: Severe Manipulation of Local Fiat Exchange Rate Leads to Naira’s 28% Intraday Plummet
DL News Report: The Nigerian currency, the Naira (NGN), experienced severe volatility on Wednesday, with authorities accusing individuals of manipulating the exchange rate of the Naira against the US dollar through cryptocurrency exchanges. They called for a ban on cryptocurrencies. However, on the same day, all the country’s exchanges experienced website access issues.
Contents:
Toggle
Exchanges Accused of Manipulating Naira Exchange Rate
Presidential Advisor: Calls for Cryptocurrency Ban
Users Unable to Access Exchange Websites
Mixed Feelings from Nigerian Authorities and the People
Authorities Maintain a Tough Stance on Cryptocurrency Regulation
People Embrace Cryptocurrencies
On the 21st, the exchange rate of the US Dollar to the Naira (USDT/NGN) experienced a sharp fluctuation, first dropping to a historic low of 1,900 and then suddenly rising to 1,358 within hours, before eventually settling at 1,675 Naira, representing a significant drop of up to 28.5% in a single day.
USDT/NGN trading pair on Binance (21st)
This significant volatility caught the attention of the local government, who blamed the cryptocurrency exchanges themselves, claiming that they provided users with a platform to manipulate exchange rates.
Specifically, exchanges like Binance were accused of facilitating wash trading, where individuals created false buy and sell orders on the USDT/NGN trading pair on Binance, leading to a collapse in the value of the US dollar against the Naira on the platform.
This behavior was said to have affected Nigeria’s parallel foreign exchange market, including peer-to-peer merchants and forex traders who relied on the platform for quotes.
Binance responded by stating that foreign exchange rates are influenced by various complex factors and that Binance does not have any influence over them.
President’s advisor, Bayo Onanuga, strongly condemned these actions and called for the Economic and Financial Crimes Commission (EFCC) and the Central Bank of Nigeria (CBN) to swiftly ban cryptocurrency exchanges in the country.
He stated, “The EFCC and CBN should take action against these platforms that attempt to manipulate the country’s currency and ban cryptocurrencies, otherwise our currency will continue to depreciate.”
According to Bloomberg, Nigerian authorities are indeed taking steps to crack down on cryptocurrency exchanges. Users of platforms including Binance, Coinbase, and Kraken have reported issues accessing these websites recently.
The President’s spokesperson confirmed that an order had been issued instructing telecom and internet service providers to block access to cryptocurrency trading platforms.
Binance responded by saying, “We have noticed that some users are experiencing issues accessing binance.com. Currently, only website users are affected, while the application is still accessible.”
Cointelegraph: Email sent by Binance to local users
It is reported that access has now been restored, and local users can continue to use the services. However, it is still unclear whether the ban has been temporarily lifted.
In 2021, the Central Bank of Nigeria previously banned banks from providing services to cryptocurrency exchanges, but this order was later rescinded.
Last year, the Securities and Exchange Commission (SEC) of Nigeria also demanded that Binance Nigeria Limited cease operations in the country due to its failure to register with the local authorities.
However, the exchange rate of Bitcoin against the Naira reached a new all-time high in October last year, with a yearly increase of 269%, seemingly due to the significant devaluation of the Naira at that time.
Since the announcement that the exchange rate system would transition to a floating rate determined by the market, the exchange rate of the US dollar against the Naira has already dropped by 90%.
A previous report by research company Chainalysis also highlighted the penetration of cryptocurrencies in the Nigerian market, despite its relatively smaller size in the Central and Southern Africa region. Cryptocurrencies have become an important part of daily life for local residents.
Coinbase
Kraken
wash trading
exchange
Nigeria
Binance
Read More:
Bitcoin Hits All-Time High in 14 Countries, Former CTO of Coinbase: The US Dollar is a Vampire
Coinbase CEO: The Key to Successful Cryptocurrency Payments is Low Fees
