DL News Report: Nigerian Naira (NGN) experienced significant volatility on Wednesday, with authorities accusing individuals of manipulating the exchange rate of USD to NGN through cryptocurrency exchanges, and calling for a ban on cryptocurrencies. However, on the same day, all exchange websites in the country were indeed inaccessible.
Contents:
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Exchange Accused of Manipulating Naira Exchange Rate
Presidential Advisor Calls for Cryptocurrency Ban
Users Unable to Access Exchange Websites
Mixed Feelings of Nigerian Authorities and People
Authorities Maintain a Strong Stance on Cryptocurrency Regulation
People Embrace Cryptocurrencies
On the 21st, the exchange rate of USD to NGN (USDT/NGN) experienced a drastic change within a short period of time. It first dropped to a historic low of 1,900, then suddenly rose to 1,358 within a few hours, finally returning to 1,675 Naira, experiencing a maximum drop of 28.5% on that day.
USDT/NGN trading pair on Binance (21st)
Such a significant fluctuation has caught the attention of the local government, which pointed fingers at the cryptocurrency exchanges themselves, claiming that they provide platforms for users to manipulate exchange rates.
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Specifically, exchanges like Binance were accused of facilitating wash trading, where individuals create false buy and sell orders on the USDT/NGN trading pair on Binance, leading to the collapse of the value of USD to NGN on Binance.
This behavior is said to have affected Nigeria’s parallel foreign exchange market, including Binance’s peer-to-peer merchants and forex traders who use the platform’s quotes for trading.
Binance responded to this by stating:
Foreign exchange rates are influenced by various complex factors, and Binance does not have any influence on this.
Bayo Onanuga, a presidential advisor, expressed strong condemnation and called for the Economic and Financial Crimes Commission (EFCC) and the Central Bank of Nigeria (CBN) to swiftly ban the operations of cryptocurrency exchanges in the country.
EFCC and CBN should take action against these platforms that attempt to manipulate the national currency and ban cryptocurrencies, or else our currency will continue to devalue.
In response to this, Bloomberg reports indicate that Nigerian authorities are indeed taking steps to crack down on cryptocurrency exchanges. Users of platforms such as Binance, Coinbase, and Kraken have recently reported being affected when accessing these websites:
A spokesperson for the president confirmed that an order had been issued by the authorities, instructing telecom and internet service providers to block access to cryptocurrency trading platforms.
Binance initially responded:
We have noticed that some users are experiencing issues accessing binance.com. Currently, only website users are affected, while the app is still available.
Cointelegraph: Email sent by Binance to local users
It is reported that the affected platforms have now been restored, and local users can continue to use the services. However, it is still uncertain whether the ban has been temporarily suspended.
In 2021, the Central Bank of Nigeria previously banned banks from providing services to cryptocurrency exchanges, but this order was later revoked.
Last year, the Securities and Exchange Commission (SEC) of Nigeria also demanded that Binance Nigeria Limited cease its operations in the country, citing its failure to register with the local authorities.
(Nigerian Securities and Exchange Commission: Binance is operating illegally in the country, immediately stop promoting to users)
However, the exchange rate of Bitcoin to Naira reached a new all-time high in October last year, with an annual increase of 269%, seemingly due to the continuous significant devaluation of the Naira at that time.
It is reported that since the announcement by the authorities to adopt a floating exchange rate system determined by the market, the exchange rate of USD to NGN has already dropped by 90%.
A previous report by research firm Chainalysis also pointed out that despite the relatively smaller market size in the central and southern African region, cryptocurrencies have penetrated the market and become an important part of daily life for local residents:
Nigeria serves as a strong example, ranking second in the global cryptocurrency adoption index, with an annual growth rate of trading volume reaching 9%, standing out in the region.
Coinbase
Kraken
wash trading
exchange
Nigeria
Binance
Further reading:
Bitcoin Reaches All-Time High in 14 Countries, Former CTO of Coinbase: The Dollar is a Vampire
Coinbase CEO: The Key to Successful Cryptocurrency Payments is Cheap Fees