(VOICE OF NAIJA) – This is certainly not the best of times for the management and board of Binance Holdings Limited (Binance), especially its founder and chief executive officer, Changpeng Zhao.
The reason for this is not far to seek: Binance, currently the world’s largest cryptocurrency exchange platform is in a horns of a dilemma.
Like other countries where it operates, the activities of Binance have been subjected to public scrutiny and this time around in Nigeria, Africa’s largest economy by size and stature.
The digital assets platform run by the Canadian national, serves as a window for peer-to-peer transactions allowing users to advertise interest to sell or buy currencies of their choice.
The first hint that the company was going to have a brush with the authorities going forward, became apparent last September, when the Security and Exchange Commission (SEC), wrote a disclaimer against it after declaring matter-of-factly that its activities were illegal and therefore cannot be recognised as a legal entity under the law of the Federal Republic of Nigeria.
Of course, if the people behind Binance ever had the notion that operating in Nigeria was going to be a tea party affair, because of the possibly weak regulatory frameworks in the country, that illusion was literally shattered before their eyes, barely a few days ago.
Just like the Americans would say, Binance was caught with a ‘smoking gun’, so there is no denying the fact that it has a case to answer!
Things literally began to fall apart for Binance Nigeria, when words went round that the cryptocurrency exchange platform working with some local and international syndicates were largely responsible for the FX crisis and the depreciation of the naira in recent times.
To make matters worse, some preliminary investigation carried out by the Economic and Financial Crimes Commission (EFCC) working with some local and foreign counterparts, uncovered what may have been the highest heist in the country, including money laundering.
Amongst other things, Binance Nigeria Limited, it was discovered that despite transacting business I’m Nigeria in the last seven years, it failed to properly document the business in the country as far as the authorities are concerned.
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As if that was not enough the governor of the Central Bank of Nigeria, Olayemi Cardoso, only recently, disclosed the company had ran transactions valued at over $26billion with the identities of the businesses unknown, besides being engaged with terror financing and the likes.
Things however came to a head when two executives of the company who flew into the country from the US as part of moves to negotiate with the Nigerian authorities amid a crackdown on the crypto platform were arrested and detained shortly after they arrived Abuja even as the government obtained a court order to keep them for 12 days.
The Office of the National Security Adviser (ONSA) on Thursday confirmed that the crypto exchange platform, Binance, is being investigated by Nigerian authorities.
In its first official confirmation of the clampdown efforts on the activities of Binance and other crypto platforms, the ONSA confirmed that the security adviser’s office is coordinating an interagency investigation into the operations of Binance.
“I am confirming that the office of the national security adviser, as part of ongoing operations in the foreign exchange market with the CBN and other law enforcement and security agencies, is coordinating an interagency investigation into the operations of Binance,” Zakari Mijinyawa, Head of Strategic Communication at the Office of the National Security Adviser, revealed.
Apart from Binance, other platforms such as Forextime, OctaFX, Crypto, FXTM, Coinbase, and Kraken, among others, were equally blocked.
Presidency and regulatory sources said the government decided to move against Binance and other crypto firms following reports that currency speculators and money launderers were using them to execute criminal activities.
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Authorities believe the ‘criminal activities’ going on on platforms are contributing significantly to the weakening of the naira.
Though, Nigeria is the first African country Binance had its footprint, the company operated in other climes Iike the US, where it also faced similar fraud charges..
According to court documents, Binance admitted to prioritising growth and profits over compliance with U.S. law.
Binance was launched in 2017 and focused on attracting high-volume customers, including U.S.-based customers.
Between August 2017 and October 2022, U.S. users, including VIPs, conducted trillions of dollars in transactions on the platform, generating over $1.6 billion in profit for Binance.
As part of the plea agreement, Binance has agreed to forfeit $2,510,650,588 and to pay a criminal fine of $1,805,475,575 for a total financial penalty of $4,316,126,163.
Binance has also agreed to retain an independent compliance monitor for three years and remediate and enhance their anti-money laundering and sanctions compliance programs.
Binance separately has also reached agreements with the CFTC, FinCEN, and OFAC, and the Department will credit approximately $1.8 billion toward those resolutions.
As it stands, Binance Nigeria, a lot will have to give as the Nigerian authorities won’t risk any chances with the processes already established to ensure that the company is made to face all necessary penalties considering the level of malfeasance it has discovered with its operations in the country.
It is instructive to note that this case with the Nigerian authorities will serve as a litmus test of sorts especially in the federal government’s quest to sanitise the country’s FX market.
Pray, will this signal the end of Binance operations in Nigeria? Time will tell!