Binance is a cryptocurrency exchange platform founded in 2017 by Chinese-Canadian developer, Changpeng Zhao (aka CZ).
Zhao’s company, Beijie Technology, created the exchange after successfully raising $15 million.
Binance started operations in Nigeria around 2020, but has now discontinued operations as the federal government considers it as the biggest threat to the naira.
This followed the decision of the government to impose restrictions on cryptocurrency exchanges as part of attempts to halt the falling value of the local currency.
Recall that the Central Bank governor, Olayemi Cardoso, said at the end of a recent Monetary Policy Committee (MPC) meeting that cryptocurrency exchanges were conduits for money laundering.
He singled out Binance as the biggest culprit.
“In the case of Binance, in the last year alone, $26bn has passed through Binance Nigeria from sources and users who we cannot adequately identify.” he added.
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With constant weakening of the naira, crypto exchanges have been seen as one way Nigerians can protect their money against the currency’s weakness.
Since the government floated the naira in May, the currency has fallen drastically to the dollar to around N1,900 to $1, before it gradually began to regain strength to the current N1,300/$
The government accused crypto exchanges of distorting foreign exchange rates and contributing to the naira’s weakening.
Bayo Onanuga, a media adviser to President Tinubu insisted that Binance was sabotaging the country’s economy by influencing exchange rates.
“That is why the government moved against Binance,” Onanuga told Arise News in February.
“Some people sit down using cyberspace to dictate even our exchange rate, hijacking the role of the Central Bank of Nigeria.”
How Binance ended operations in Nigeria
As the battle with the Nigerian government continued, Binance in an email sent to its Nigerian users, said it was shutting down all its naira-based services on March 8.
“This affects NGN services only, you can continue to make use of services and products for other available cryptocurrencies,” the crypto giant said in the email sent to users.
Subsequently, two officials of the company flew into Nigeria to negotiate with the government over the exit but were detained and their passports seized.
Binance has denied any wrongdoing in a statement posted on its website last month. However, Nadeem Anjarwalla, one of its top executives escaped from custody at Abuja guest house a few days ago using a smuggled passport, according to the National Security Adviser, Mallam Nuhu Ribadu.
How does Binance work?
The Binance‘s Exchange allows users to exchange fiat for Bitcoin or other coins. It provided several ways through which one can buy crypto on Binance which includes P2P trading where Binance provides a peer-to-peer (P2P) trading service, which connects buyers and sellers of cryptocurrency directly. This facilitates fiat payments, with a wide variety of payment options that depend on the users’ preferences.
Also, Binance had partnered with Simplex to provide a brokerage service supporting credit and debit cards. This service allows one to buy a variety of different cryptocurrencies with a credit or debit card, as well as using these cards to deposit fiat currency into your account. However, this service comes at a premium that can get as high as 4.5% in fees for USD deposits using a debit card. SEPA/Wire transfers
In the same vein, Binance Futures, which was launched in 2019, enables traders to speculate on the price of (rather than purchase and sell) Bitcoin and various popular cryptocurrencies, including Bitcoin Cash, Ethereum, Litecoin, Ripple and more.
The platform allows leveraged trading, which means that traders can multiply their profits (but also losses) by 20 times. Binance Futures balances are held separately from users’ regular trading accounts and must be funded with Tether (USDT) as collateral. All profits and losses will also be realized in USDT.
The user interface for Binance Futures looks almost identical to the Binance spot trading interface, aside from a few extra functions for controlling leverage and viewing open positions.
Payment Methods and Currencies of Finance
There are over 500 coins available to trade, deposit and withdraw on the exchange, including major altcoins such as: Bitcoin (BTC) Ethereum (ETH) Litecoin (LTC) Ripple (XRP) Bitcoin Cash (BCH) Chainlink (LINK) Binance Coin (BNB) and Binance USD (BUSD).
Others are Basic Attention Token (BAT) Cosmos (ATOM) Dash (DASH) EOS (EOS) Nano (NANO) Paxos Standard (PAX) TRON (TRX) TrueUSD (TUSD) Tether (USDT) Stellar Lumens (XLM).
What are experts saying?
The Chief Technology Officer (CTO) at Describe Innovation Limited, Japheth Johnson said it is inappropriate for the federal government to think that Binance is the reason for the free fall of the Naira.
He said, “For a country of over 200 million, one company cannot be the reason for the free fall of the Naira. This is because there are other factors that the federal government has turned a blind eye to.
“For instance, EFCC has come out to say that the majority of frauds are aided by banks but nobody is saying anything. Also CBN has come out to say that it is selling forex to only Bureau de Change Operators. Why not the banks? If we can deposit and withdraw our naira in the bank. Why can’t we also do same with the dollars?”
He further explained that cryptocurrency companies however supported the government initiatives in terms of regulatory measures like Know your Customer (KYC) policy.
“We fully support the government’s policy and regulations on Know your Customer for every cryptocurrency trader as it will help to curb money laundering and other illicit financial transportation. However government needs to just adopt a more diplomatic way in regulation,” he said
Johnson further stated that Binance is not the only platform for cryptocurrency transactions and with the exit of Binance, many Nigerians may go in search of alternatives.
A crypto trader, Adamu said the exit of Binance had a negative impact on the economy, adding that Binance has nothing to do with the current state of the Naira.
He said “I don’t know why the authorities come to the conclusion that Binance is the problem of our forex crisis and liquidity. The banks are complicit and there is no type of illicit transaction that is not also going on in the banks using the dollars. So I ask is it Binance that was responsible for the Naira crashing to about N1,900 to $1? Definitely not,” he said.
Speaking on its impact on the economy, he said, “Binance has kept about 10 million Nigerians in legitimate employment and any institution that can provide such platform for earnings by citizens of a country, the government should recognize rather than humiliate and it will have an impact on the economy,”
Adamu added that instead of addressing issues that are making multinational companies leave Nigeria like power, high cost of doing business and taxes, the government was making matters worse.
He added Nigerians are smarter people and the exit of Binance would mean that other decentralised crypto exchanges would spring up just like the way Twitter was banned and Nigerians subscribed to VPN to tweet.
Speaking on ways to make Binance operate freely without harming the Naira, he said “Binance should register fully in Nigeria in line with extant laws.”
“I think that’s the major thing to do and also strengthen the Know Your Customers Policy. One thing I know is Binance takes its KYC seriously, because the amount CBN is saying went through Binance is not possible. You can only deposit but cannot move such an amount through Binance,” he added.
Daily Trust also reports that an IT expert, Professor Haruna Chiroma, said the exit of Binance from Nigeria will have a huge effect on the revenue of Internet service providers in the country.
Chiroma, a lecturer at Hafr Al-Batin University, Saudi Arabia, said the crackdown on Binance by the Federal Government would make Internet service providers witness low traffic as demand for large volumes of data would reduce as a result of the crackdown.
The Saudi based IT expert in a phone interview with our reporter added that the impact on the Binance crackdown would be more on the economy than the IT infrastructure.
“From the perspective of the IT, the Binance is a crypto platform built on the blockchain technologies, thus, crackdown on the Binance can reduce the growth of blockchain technology in Nigeria. Internet service providers networks can witness low traffic as demand for large volumes of data will reduce as a result of the crackdown”, he said.
