Binance’s Nigerian operations are under threat as the government recalls CEO Richard Teng.
Binance’s legal troubles in Nigeria are growing rapidly as the government could demand hefty financial compensation for the exchange’s role in manipulating the local currency.
On March 1, the BBC reported that the Nigerian government fined Binance a total of $10 billion for allegedly facilitating speculative currency trading.
This led to a sharp decline in the value of Nigeria’s naira fiat currency. The Beeb quotes government official Bayo Onanuga as saying that Binance is “accommodating people who fix exchange rates which are quickly impacting the Nigerian economy.”
However, the People’s Gazette cited Onanuga withdrawing this astronomical sum as saying the government “could impose heavy fines on Binance for what happened,” but added: “Binance will not be fined. “I was never notified or told that the fine would definitely be $10 billion,” he claimed. ” Onanuga added, “Nothing has been confirmed yet.”
A Binance Nigeria official told the Gazette that the exchange was indeed discussing the dispute with the Nigerian government, but claimed they had “not heard a demand for $10 billion” from government sources. The official added that while they hope to fully resume local operations soon, “we have no intention of paying fines for our staff or services.”
The naira hit a record low against the US dollar last week, causing headaches for both the government and Nigerians. Last December, the Central Bank of Nigeria (CBN) lifted restrictions on digital asset companies’ access to traditional banking services imposed in 2021. Onanuga told the BBC that Binance had “almost wrecked our economy in a very short period of time.”
The uproar came as Binance traders began trading naira for stablecoins pegged 1:1 to the U.S. dollar (mainly Tether’s USDT) using the controversial peer-to-peer (P2P) transfer platform. It has begun. The rates offered through P2P traders are different from the official rates provided by the CBN. After the government’s investigation reached a fever pitch, Binance disabled Naira trading on its P2P platform.
Onanuga added that only the CBN has the authority to modify the Naira exchange rate and therefore the non-uniform exchange rate offered by Binance is illegal. The government is also demolishing illegal Bureau de Change retail stores across the country, with a government official saying: “We will not allow people to trade foreign exchange under trees or in other unauthorized places.”
Executives arrested, CEO summoned
It is clear that the Nigerian government is not playing around, as two Binance executives, an American and a British citizen, were detained on Monday and questioned on charges of money laundering and terrorist financing. CBN Chairman Olayemi Cardoso claimed that many Binance transactions involved “sources and users that we cannot properly identify.”
Onanuga said the detained Binance executives were cooperating with the government to provide information about customers, but could not say how long the investigation would last. Onanuga added that Nigeria’s Ministry of State Security is leading the investigation into “regulation of the currency exchange market.”
On March 2, Nigeria’s Punch reported that the House of Representatives Financial Crimes Committee had summoned Binance CEO Richard Teng before March 4 to answer questions. Committee chairperson Ginger Onwusibe warned that the government would exercise its constitutional powers to take appropriate action. If Binance does not heed the summons.
Onwusibe also accused Teng of ignoring a mid-December request to appear before the committee. “You can’t run a company with over 10 million Nigerians on the platform if you don’t pay taxes and have a physical office where Nigerians can lodge complaints. The days of exploitation are over and all culprits must be held accountable.”
Like most jurisdictions where Binance operates, Binance does not have a license to operate in Nigeria, which has over 200 million citizens. In this case, Binance is not an outlier (for once) because the government has not yet officially approved the exchange of digital assets. The Nigerian Communications Commission (NCC) recently blocked not only the Binance website, but also websites such as US exchange Coinbase (NASDAQ: COIN) and Kraken.
Nigeria is the latest market to test Binance’s newly asserted commitment to regulatory compliance. $4.3B Payments Binance and Founder/CEO
Changpeng ‘CZ’ Zhao’s contact with US authorities last November forced CZ to resign after years of scorn for its compliance with anti-money laundering (AML) and know-your-customer (KYC) requirements.
While CZ awaits sentencing in U.S. federal court on April 30, new CEO Teng talked a good game about Binance rejecting its previous backstabbing ways and cooperating with regulators and governments. However, meeting these compliance needs is proving more difficult, as the current approach to the Philippine market shows.
Pig Butcher Loves Binance
Adding to that last point, Binance recently had the dubious honor of being featured in a recent study by John Griffin, a finance professor at the University of Texas at Austin’s McComb School of Business. Griffin, who co-authored a seminal 2018 report on fiat price manipulation of BTC tokens through Tether-based wash trading, has now turned his investigative eye to the role played by ‘cryptocurrencies’ in The Economics of Pig Butchering.
Tether also figures heavily in this new report by Griffin and co-author Kevin Mei. The report claims that USDT is the preferred digital asset in up to 84% of pig slaughter fraud exit strategies. The report raises eyebrows at claims that a whopping sum of “at least $75.3 billion” has been stolen from pig slaughter operations.
However, Binance has been repeatedly cited as one of the “less transparent” digital asset exchanges that offers weak AML and KYC programs that fraudsters use to make financial escapes. Of the three exchanges that received the largest influx of funds from fraudsters, Binance was the “largest target overall,” with more than twice the value transferred to the next highest exchange (OKX).
The study also found that the main victims of scammers lived in China, but that changed after the country cracked down on its residents’ access to exchanges in mid-2021. That December, the scammers’ focus shifted to American victims, giving American authorities yet another reason to bring down their hammer.
CZ was instructed to fork over his passport.
Griffin’s findings about Binance’s role in causing Americans to lose their life savings pose additional problems for CZ, who is currently out on $175 million bond and waiting to find out how long he will be sentenced to prison. may cause it. He made several bids to obtain permission to temporarily travel to Dubai, where his family currently resides, but the Department of Justice (DoJ) protested these bids, and U.S. District Judge Richard Jones sided with the DoJ each time.
The DoJ now appears to be concerned that CZ may attempt to leave the country with or without court permission. On February 23, the DoJ filed an application with Judge Jones requiring CZ to hand over its Canadian passport to a “third party custodian employed and supervised by Counsel of Record.” This third party must accompany CSN on any travel within the continental United States where identification is required.
The DoJ wants Jones to order CZ to hand over any other passports in his possession, either valid or expired. They also want CZ to notify the government at least three days before traveling within the continental United States so the government can consider whether to approve such movement.
Such concerns are not entirely unreasonable. The FBI recently re-arrested a former informant.
Hunter Biden has been released on bond after being accused of lying about his criminal history. One of the reasons the re-arrest was justified was the FBI’s concern that Alexander Smirnov had millions of dollars hidden away and that his lawyers were helping him plan to escape the country.
CZ is billions It’s hidden away somewhere and may be unnerving as the Justice Department admits it could face up to 10 years in prison after a settlement.
Binance’s Changing Legal Lineup
Meanwhile, Binance is showing further signs of internal discord after being accused by the U.S. Securities and Exchange Commission (SEC) of selling unregistered securities and misleading customers. On February 23, attorney Richard Grime announced that he was stepping down from his role as Binance’s legal representative.
Grime’s exit comes a day after the federal judge hearing the case denied two Binance applications to keep certain evidence private. Judge Amy Berman Jackson ruled that she had good cause to keep the identities of certain Binance employees and shareholders secret, but she denied a bid for further redaction.
There are many reasons why lawyers end cases before proceedings are complete, so the timing of Grimes’ resignation and failure to seal certain evidence may be entirely coincidental. For example, Binance lost its entire team of lawyers (from Wilmer Cutler Pickering Hale and Door LLP) on January 23, a day after Judge Berman briefly ignored Binance’s motion to dismiss the SEC lawsuit.
Grime may also have been uneasy about a civil lawsuit recently filed against Binance for allegedly facilitating terrorist financing related to the October 7 Hamas attack on Israel. Or maybe he just wanted to officially cut ties with Binance before CZ made his lawyers an offer they couldn’t refuse for helping him sneak out of the country.
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