The past few weeks have been eventful in Nigeria’s cryptocurrency space following the recent government crackdown on cryptocurrency exchanges. The recent directive aimed at identifying and blocking cryptocurrency trading accounts has sparked rumours of an impending ban on crypto trading activities in the West African country.
The Central Bank of Nigeria (CBN) working with the country’s National Security Advisor (NSA) and the Economic and Financial Crimes Commission (EFCC) has been pushing for regulatory scrutiny in the space in a bid to help curb and deter fraud and tax evasion.
In addition, the government of Nigeria believes that some players have been manipulating the forex markets using P2P trading attributing to the volatility of the Naira.
This has seen the various agencies take steps to address regulatory loopholes being exploited by fraudulent individuals.
Nigeria’s changing crypto landscape
The NSA recently classified crypto trading as a national security issue. This has been viewed as a precursor to a new regulation just over 6 months since the CBN lifted a two-year ban on cryptocurrency transactions in December last year.
Additionally, the security agency has issued a directive to four fintech startups: Kuda Bank, Moniepoint, OPay, and Palmpay, to pause new signups on their platforms. The pause will allow the startups to be audited and ensure compliance with the CBN’s KYC (Know Your Customer) guidelines. Notably, other services including withdraws and deposits were not impacted by this directive.
The CBN’s governor, Olayemi Cardoso, recently revealed that $26 billion from unknown sources and users passed through Binance Nigeria. This has raised concerns over potential illegal activities, subsequently prompting a crackdown on the Crypto exchange. This has seen the detention of Binance executive Tigran Gambaryan with another executive, Nadeem Anjarwalla, facing potential extradition from Kenya after evading authorities in Nigeria.
Binance Nigeria Woes
Binance CEO, Richard Teng, is calling for the release of Tigran Gambaryan who has been in Nigerian custody for the last 70 days. The latest revelations from the CEO add to more controversy surrounding the detention of the Binance Executive. Teng says that Binance execs were invited for a collaborative meeting just to be later blindsided. Furthermore, the CEO also alleges that Nigerian officials demanded “secret payments” to ease Binance’s legal woes in Nigeria.
To invite a company’s mid-level employees for collaborative policy meetings, only to detain them, has set a dangerous new precedent for all companies worldwide.
Richard Teng, CEO of Binance on the detention of Tigran Gambaryan.
Events leading to the detention of Gambaryan
According to Teng, the Gambaryan and other execs were lured by a committee of Nigerian officials for “collaborative policy meetings” in private before the January 10th public hearing. The public hearing was to allow Binance to respond to any allegations raised by the House Committee on Financial Crimes (HCFC). This led to the crypto exchange’s request to present written submissions as opposed to a public hearing as this would give them more time to prepare. This was to be taken under consideration by the committee and a response be relayed to the Binance team later. However, things didn’t go as expected.
The Binance team was first approached by unknown individuals who suggested the team settle the allegations in payment. They would later receive a similar request from someone claiming to be an agent representing the Committee. Binance was given a 48-hour deadline to pay a “significant amount in cryptocurrency in secret” to make these things – allegations against Binance – go away. Binance rejected this demand.
“We, of course, declined the payment demand via our counsel, not viewing it to be a legitimate settlement offer, and clarified that we would engage in settlement negotiations…” Richard Teng writes on a blogpost.
Binance has since turned off P2P trading in Nigeria and removed the ability to trade all Naira pairs on its platform. According to Teng, this was done in hopes that it would help ease the Nigerian government’s concerns and help secure Gambaryan’s release. This, however, didn’t work and Gambaryan is still in Nigerian custody.
State of Crypto regulation in Kenya
Kenya has also been pushing for new regulations around digital assets in efforts to address money laundering and terrorism financing concerns. There have been challenges in monitoring and regulating the crypto space in the country – which saw the Interior CS, Kithure Kindiki, hint at a cryptocurrency ban in Kenya last year.
But the sentiments around cryptocurrency seem to be changing as instead of a total ban in the country the government seems to be working on a regulatory framework for digital assets.
In January, the Blockchain Association of Kenya (BAK) unveiled the Virtual Assets Service Provider (VASP) draft proposing the establishment of clear licensing protocols, consumer protection mechanisms, counter-terrorism, and anti-money laundering measures. Additionally, the bill proposes the implementation of a regulatory sandbox that would provide an environment for testing and developing new technologies while adhering to regulations.
In April, the National Treasury CS, Njuguna Ndung’u, announced a multi-agency working group that would develop a regulatory and monitoring framework for virtual assets (VAs) and VASPs.
President Ruto has also recently revealed that Marathon Digital Holdings, a global digital asset company, will consult with the National Treasury on a cryptocurrency framework.
Update: Updated the article to include Binance CEO’s official statement,
