Nigeria: Exclusive - Inside Details of How Nigerian Govt Detained Binance Executives

28 February 2024

One of the two detained Binance executives is an American, while the other is British-Pakistani.

The Nigerian government has detained two executives of the Binance crypto exchange platform amid efforts to stabilise the nation's foreign exchange market and salvage the value of the local currency.

Sources familiar with the matter told PREMIUM TIMES that the two executives were detained in Abuja, Nigeria's capital, a day after they flew into the country as part of moves to negotiate with the Nigerian authorities amid a crackdown on the crypto platform.

Last week, PREMIUM TIMES reported how the Nigerian government blocked the online platforms of Binance and other crypto firms to halt what it described as continuous manipulation of the forex market and illicit movement of funds.

Sources within the major telecommunication companies in the country told PREMIUM TIMES last week that the Nigerian Communications Commission (NCC) communicated the directive to telcos, and they immediately acted on the advisory.

Apart from Binance, other platforms such as Forextime, OctaFX, Crypto, FXTM, Coinbase, 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. Authorities believe the 'criminal activities' going on the platforms are contributing significantly to the weakening of the naira.

Binance, a digital assets platform, serves as a window for peer-to-peer transactions, allowing users to advertise interest to sell or buy currencies of their choice.

In September 2023, Nigeria's Securities and Exchange Commission (SEC) disclaimed Binance Nigeria Limited, saying the platform was "neither registered nor regulated by the Commission and its operations in Nigeria are therefore illegal".

Despite the warning by the regulatory agency, the firm continued its operation, attracting huge patronage especially among urban youths and suspected speculators and money launderers. Aside from suspicions of economic sabotage, officials also speak of national security concerns as the platforms are often patronised by other criminal groups, including for payments of ransom.

In its reaction last week, Binance said "users behaving in a manipulative way" would be removed from its platform.

"As industry leaders, we are working hand in hand with local authorities, lawmakers, and regulators to ensure we act on non-compliance," the platform added, noting that it is "setting an upper limit for ads, filtering and removing bad ads, requiring and raising deposits for merchants posting ads as well as processes for actioning against any market manipulators."

The Binance Detention

Sources with details of the matter told this newspaper earlier in the week that the two executives of the online platform arrived in Nigeria on Sunday to negotiate with the government amid the crackdown.

On Monday afternoon, the executives met with top cyber security officials and other investigators from the office of the National Security Adviser to discuss the various areas of contention.

However, the meetings were deadlocked as Binance officials declined to meet some of the demands put forward by the Nigerian government.

They were also accused of operating a business worth billions without the requisite registrations and documentation.

According to sources who spoke with PREMIUM TIMES Wednesday evening, the Nigerian authorities requested Binance executives to provide data relating to transactions involving the Nigerian Naira on the Binance platform in the last seven years. They also demanded that some other data relating to Nigeria be deleted from the Binance platform.

However, the Binance executives insisted that they should be taken to their respective countries' embassies before they could comply.

While the full identities of the two Binance executives remain sketchy as of press time Wednesday night, PREMIUM TIMES gathered that one of them is an American and the other a British-Pakistani.

The Nigerian government also obtained a court warrant to detain the officials for at least twelve days in the first instance.

A source with knowledge of the matter told PREMIUM TIMES that the investigation was consequently taken over by the Economic and Financial Crimes Commission (EFCC) while the two executives were detained at a guest house near the Office of the National Security Adviser.

The EFCC did not immediately respond to PREMIUM TIMES' enquiries seeking clarity about the issue Wednesday night. Dele Oyewale, the spokesperson of the commission, told this newspaper to call back later.

Meanwhile, indications emerged Wednesday that Binance disabled its peer-to-peer function for Nigerian users on its platform.

More popularly known as P2P, the platform allows users, buyers and sellers to trade without third-party interference and became popular among Nigerians when the administration of former President Muhammadu Buhari banned cryptocurrency in 2021.

With the disabling of the P2P platform for Nigerian users, it remains unclear whether Nigerians would still be able to trade on the Binance platform.

Binance officials did not immediately respond to enquiries on the matter Wednesday as emails sent to their communication unit were not responded to.

Earlier on Tuesday, the Central Bank of Nigeria claimed that the sum of $26 billion flowed through Binance Nigeria over the past year from "unidentified sources".

"In the case of Binance, in the last one year alone, $26 billion has passed through Binance Nigeria from sources and users who we cannot adequately identify," Olayemi Cardoso, the CBN governor, said.

The apex bank governor also hinted that there is a collaboration among government agencies such as the Securities and Exchange Commission (SEC), the Economic and Financial Crimes Commission (EFCC), the Police, and the Office of the National Security Adviser (NSA) to address such illicit financial activities.

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