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Nigerians switch to alternative p2p options after Binance clampdown

Navigating Binance's Constraints: Nigerians are embracing P2P solutions amidst cryptocurrency evolution.
Crypto and Naira

Nigeria, renowned for its early embrace of cryptocurrency, finds herself at a crossroads as major exchange Binance imposes limitations on its services within the country. This move has prompted a surge in exploration of alternative peer-to-peer (P2P) options, underscoring Nigerians' resilience and adaptability in the face of evolving financial landscapes.

Many Nigerians are now exploring the features and services of Bybit, Bitget, Kucoin, and Coincola and messaging platforms like Telegram. Users exploring alternative options for crypto trading aren't limited to just other exchange platforms. According to two crypto traders interviewed by TechCabal, they've been experimenting with Telegram's recently launched P2P trading platform.

Telegram Crypto P2P Trading Option

Introduced in September 2023, Telegram's crypto wallet, integrated as a bot within the messaging app, enables direct cryptocurrency trading between users and facilitates crypto purchases using bank cards.

However, while this feature provides the convenience of trading within Telegram, it falls short of meeting all the needs of crypto traders. One trader interviewed by TechCabal expressed skepticism about the safety of trading on the app, citing concerns about its newness and uncertainty regarding how user complaints are handled.

These concerns are justified. Telegram offers a custodial wallet, meaning it retains users' access keys crucial for authorizing crypto transactions. This arrangement raises security issues, as entrusting keys to a third party increases the risk of exposure in the event of a security breach.

A significant worry regarding Telegram's custodial wallet is the potential vulnerability it poses. Unlike other platforms, Telegram retains users' private keys necessary for crypto transactions, thereby increasing the risk of cryptocurrency theft in the event of a Telegram hack.

Binance's Restrictions and the Nigerian Response

On Wednesday, February 22, 2024, News broke out that Nigerian Communications Commission (NCC) instructed all telecom networks in the country to restricted user access to the websites and apps of Binance, Coinbase, Kraken, and other major crypto exchange firms operating in the country. Due to this, Binance websites and application became unaccessible. Authority accuses these crypto companies of manipulating prices of the naira-to-dollar pair in unofficial markets.

In the same month, Binance altered its policy, restricting Nigerian users from conducting fiat-to-crypto (naira-to-usdt) transactions directly on its platform. While not a complete ban, this move substantially restricted Nigerians' seamless access to the cryptocurrency market. The rationale behind Binance's decision is said to be stricter regulations and risk management policies as the company continues to face scrutiny from the Nigerian government. Consequently, due to the ongoing dispute, the exchange has ceased all naira services on its platform.

Furthermore, one of the company's two executives - Tigran Gambaryan and Nadeem Anjarwalla, who arrived in the country to address the issue of its blocked website and app, is currently detained in the country FCT - Abuja, while the other is rumored to have fled out from the county.

Tigran Gambaryan and Nadeem Anjarwalla
Nadeem Anjarwalla and Tigran Gambaryan

The Nigerian government has continually accused Binance of forex price manipulation on its platform. These suspicions were substantiated following a government analysis of peer-to-peer trading transactions, revealing substantial buy orders—up to $1.9 million—for USDT by Nigerian retail traders who failed to complete the transactions, sparking concerns of price manipulation for personal profit. The investigation further disclosed that the artificial demand for USDT precipitated a rapid decline in the value of the naira, plummeting from $1/₦1,500 to $1/₦1,950.

In response, Nigerian Government allegedly slammed $10 billion fines on Binance for role and contribution in FX crisis. In addition to the penalties imposed on Binance, Nigerian government had also levied tax evasion allegations against the crypto firm, along with its detained executives, Nadeem Anjarwalla and Tigran Gambary. The government accused the company of three tax infractions: failure to register with the tax collection agency, the Federal Inland Revenue Service (FIRS), failure to remit value-added tax (VAT) and company tax, and failure to submit tax returns.

Prior to these tax evasion charges, Binance had announced intentions to mend its relationship with the Nigerian government. On Thursday, March 14 2024, Binance released a statement reaffirming its dedication to compliance and cooperation with Nigerian authorities. The company asserted its provision of assistance to Nigerian law enforcement in the investigation of financial crimes, including scams, fraud, and money laundering.

However, as Nigerian's most favorite crypto firm Binance is currently facing scrutiny from the Nigerian government, Nigerians are now pivoting towards P2P alternative options like Bybit, Bitget, Kucoin, and Coincola which facilitate direct peer-to-peer cryptocurrency exchanges. Leveraging escrow services for secure transactions, these platforms emerged as a lifeline for enthusiasts navigating Binance's restrictions.

Rise of P2P and Potential Risks

The rise of P2P options in Nigeria highlights the strong interest in cryptocurrency within the country. Offering enhanced flexibility and circumventing conventional financial channels, however, increased reliance on the P2P options also comes with potential risks and challenges.

The P2P options have enhanced regulatory scrutiny in the sense that many regulatory bodies are intensifing oversight of P2P platforms to curb money laundering and illicit financial activities. In addition, P2P options are also mitigating fraud and scams; P2P transactions, lacking centralized exchange safeguards, demand heightened vigilance to thwart fraudulent schemes.

You should also know that the cryptocurrency market is inherently volatile in Nigeria, and P2P transactions may expose users to even greater price fluctuations.

The Future of Crypto in Nigeria

Nigeria's cryptocurrency landscape is in a state of flux. While Binance's restrictions pose obstacles, the surge in P2P activity demonstrates Nigerians' continued interest in the digital asset space. Moving forward, regulations and user awareness will be crucial factors shaping the future of cryptocurrency in Nigeria. Prospects abound as Nigerian authorities deliberate on P2P platform regulation amidst Binance's policy shifts. The impact of these developments on broader cryptocurrency adoption in the country remains uncertain. Nevertheless, Nigeria's innovative ethos and tech-savvy populace are poised to drive substantive growth within the local crypto ecosystem.

In conclusion, Nigeria's dalliance with cryptocurrency stands as a testament to its resilience and adaptability in navigating financial disruptions. As the nation charts its crypto course amidst evolving global dynamics, one thing remains clear: Nigerians' indomitable spirit will continue to propel the nation towards pioneering strides in the digital asset sphere.

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About the Author

With five years experience in Media, Temmy Samuel's become a modern journalist, delivering impressive reporting about tech, finance, business and science around the world. More About Temmy

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