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Nigerian Users Criticize Binance for Imposing Exchange Rate Caps on USDT to Naira Transactions

Some Nigeria-based users of Binance’s peer-to-peer platform have blasted the crypto exchange’s decision to block or remove traders quoting USDT to naira exchange rates exceeding NGN1,802. Binance says it has the right to remove “users behaving in a malicious or manipulative way.”

The Nigerian Currency’s Woes

Some Nigerian users of Binance’s peer-to-peer (P2P) platform have accused the cryptocurrency exchange of imposing a cap on the exchange rate traders can use when converting naira to USDT. According to a social media post, Binance is allegedly doing this at the request of the central bank, which is attempting to halt the local currency’s depreciation.

In a post by Mikeal Bernard on X (formerly known as Twitter), Binance has reportedly been blocking peer-to-peer traders who quote a naira-to-dollar exchange rate that exceeds NGN1,802 for each US dollar. However, according to data from the Central Bank of Nigeria (CBN), one U.S. dollar was officially trading for just over NGN1,600 on Feb. 19. On the parallel market, one US dollar was trading for just over NGN1,710 on the same day.

Since the latter half of 2023, the Nigerian currency has been on a rapid depreciation against the U.S. dollar, recently hitting an unprecedented low. This alarming trend prompted the Central Bank of Nigeria (CBN) to implement measures and restrictions aimed at halting the naira’s continued fall.

As reported by News, these measures include restrictions on the repatriation of foreign exchange earnings by oil companies. Despite these efforts, the measures appear to be failing to stop the naira’s depreciation. Many experts predict that the exchange rate could exceed NGN2,000 per dollar in the coming weeks.

In his Feb.20 post, Bernard argued that the decision by the crypto exchange has compelled some peer-to-peer traders to shift their operations to Telegram. According to Bernard, traders using this platform can sell one stablecoin, which is equivalent to one USD, for NGN1,850 or even higher. Bernard further cautioned Nigerian authorities about the futility of their latest attempts to halt the depreciation of the naira.

“If this is how they plan to save the naira, I’m sorry but it’s going to fail woefully. Binance was only a medium. If you block Binance, people will find new ways. This whole policy is absolutely ridiculous. Naira is going to zero,” the social media user said.

Binance Pledges to Expel Manipulative Traders

Meanwhile, in an apparent response to allegations raised by Bernard and others, Binance said it reserved the right to block or remove users who fail to abide by the rules. The crypto exchange added:

“We are always investing in improving our processes and tools, which includes 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.”

Binance also all but confirmed Bernard’s claims that the crypto exchange has been instructed by the CBN and the Economic and Financial Crimes Commission (EFCC) to block transactions that use an exchange rate exceeding NGN1,802.

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