The Nigerian government has reportedly taken huge action against the world’s biggest crypto exchange, Binance. The authority had demanded $10 billion in penalty from the exchange over the allegations of manipulating exchange rates. This trouble for the exchange comes in when it is already facing challenges from some of the world’s biggest regulators.

Binance stuck in legal troubles

As per the report, the Nigerian authorities had alleged that the Binance is causing losses in the country. It stated that Binance manipulated exchange rates, leading to a nearly 70% decline in the value of the Naira in recent months.

It added that Binance has influenced the increase in foreign exchange rates, which comes under the Central Bank of Nigeria (CBN) to regulate. However, the exchange had been alleged to be exploiting exchange rates at an illegal rate. This was done during a period when the country was working to stabilize its economic situation.

Earlier, Binance confirmed the arrest of two foreign executives in Nigeria. The security agencies are questioning allegations of assisting in money laundering and financing terrorism. However, there are other charges too.

Olayemi Cardoso, the governor of the CBN, showed his concerns about the lack of identification of sources and users involved in approx $26 billion in cryptocurrency linked trades. These trades passed through Binance Nigeria. The government notes that the exchange and other crypto companies have not registered in compliance with Nigeria’s laws.

Binance has removed Naira transactions from its platforms and is said to be cooperating with the Nigerian government by providing information. Despite the disruptions, government officials emphasize active cooperation with Binance to address the situation.

This development reflects Nigeria’s ongoing efforts to regulate and control cryptocurrency activities within the country, with a particular focus on the impact on the national currency, the Naira.

2 employees detained

Two senior executives at Binance have been detained in Nigeria as part of the country’s crackdown on crypto exchanges. The executives reportedly flew to Nigeria following the recent decision to ban several cryptocurrency trading websites. They were detained by the office of the country’s national security adviser, and their passports were seized.

Binance has not immediately responded to requests for comment on the reported detention of its executives. The crackdown in Nigeria comes amid concerns about using cryptocurrency platforms for trading the Naira and the broader impact on the country’s economic stability.

Nigeria’s official exchange rate for the Naira has faced challenges, and the recent devaluation of the currency has heightened the scrutiny of cryptocurrency activities in the country.

Bitcoin (BTC), the original crypto, received a heavy backlash from the European Central Bank (ECB), while, it received a spot Exchange-Traded Fund (ETF) approval in the United States. An ECB blog suggests that Bitcoin has failed to become a global decentralised digital currency, instead falling victim to fraud and manipulation.

Bitcoin faces backlash

The US Securities and Exchange Commission (SEC) approved ETFs for Bitcoin on January 10 sparking optimism in the market. However, the ECB warns against viewing this assent as proof of Bitcoin’s safety and unstoppable success. The Central Bank suggests that Bitcoin’s fair value remains zero despite the ongoing surge.

According to the blog, society faces potentially dire consequences due to this. This includes environmental damage and wealth redistribution.

The Europen regulators highlighted that Bitcoin has failed to fulfill its original promise of becoming a global decentralized digital currency. It points out that BTC transactions are still inconvenient, slow, and costly. 

ECB raised a crucial issue of regulatory efforts to curb criminal activities on the Bitcoin network. However, this also proved to be unsuccessful. The authority underlined that Bitcoin is not a suitable investment as it lacks the essential characteristics of traditional assets. 

This is because BTC doesn’t generate cash flow, dividends, or offer social benefits. The blog calls it the allure for retail investors that often stems from the fear of missing out (FOMO). It exposes them to potential financial losses.

BTC on its way up?

Bitcoin has come a long way from trading around the $16,000 price level in January 2023 to breaching the $52,000 level in February 2024. BTC price is up by around 113% over the last year.

The biggest crypto is up by another 28% in the last 30 days. BTC is trading at an average price of $51,625, at the press time. However, Bitcoin is aiming to hit a new all time high (ATH). Its 24 hour trading volume stands at around $29 billion.

Bitcoin is nearing its major halving event. Meanwhile, the ECB seems to have a problem regarding BTC’s proof-of-work mining mechanism. The regulator mentions that it continues to have an environmental impact. Higher Bitcoin prices are correlated with increased energy consumption, as miners seek to cover higher operational costs.

The ECB further warns of a renewed boom-bust cycle. It cautioned small investors from re-entering the crypto market. However, the cumulative crypto market cap is nearing to reclaim $2 trillion mark with a bullish momentum.

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