The Nigerian government has reiterated its openness to cryptocurrency operations in the country, despite its ongoing lawsuit against Binance, the world’s largest crypto exchange. The lawsuit, valued at $80 billion, was filed by the Federal Government last month, accusing Binance of contributing to economic losses in the country through its operations.
The legal action against Binance follows an earlier incident where Nigerian authorities detained Tigran Gambaryan, a staff member from Binance’s US office, in connection with a money laundering investigation. Gambaryan was held for eight months before being released, and the charges were later dropped. Binance, which had stopped all transactions in Nigeria in March 2024, has denied the allegations made by the government.
In an interview with Semafor on Friday, the Minister of Information and National Orientation, Mohammed Idris, sought to clarify the government’s stance. He emphasized that the lawsuit was not a move to specifically target Binance but was part of a broader effort to tighten financial regulations and ensure transparency in the crypto space.
“We are ensuring that no one comes and operates without regulation,” Idris said. He further pointed out that there are other cryptocurrency companies operating within Nigeria’s borders without facing legal challenges. “There are other companies operating in the crypto sector in Nigeria, and you don’t see them facing charges,” he added.
Despite the lawsuit against Binance, Nigeria remains one of the largest markets for cryptocurrencies in Africa. The government has expressed interest in ensuring that the growing crypto industry is effectively regulated to prevent misuse while maintaining the country’s position as a key player in the global cryptocurrency market.
The federal government’s lawsuit stems from accusations that Binance, during its operations in Nigeria, violated local financial regulations. Specifically, the government claims that Binance’s activities led to significant economic losses, though the specifics of these losses remain unclear.
One of the key concerns raised by the government is the use of cryptocurrencies for illicit financial activities, such as terrorism financing, money laundering, and tax evasion. Idris underscored that these issues are not unique to Nigeria but are a global challenge that requires international cooperation. He stressed the need for cryptocurrency transactions to align with the operational standards of traditional financial institutions.
“It is not just Nigeria. Internationally it’s also important to address illicit financial flows. You can’t have a huge amount of transactions that do not meet the operations of financial dealers,” Idris said. This remark highlighted the government’s concern over the potential risks posed by unregulated or poorly regulated cryptocurrency operations, which can facilitate criminal activity.
The government has also expressed concerns about the need for greater oversight of digital assets in the country. As more Nigerians embrace cryptocurrency as a viable means of investment and financial transactions, the government is keen to ensure that it can track and regulate the flow of funds to prevent illicit activities. These concerns have become especially relevant in light of the growing interest in cryptocurrencies in Nigeria, where digital currencies like Bitcoin and Ethereum have gained substantial popularity.
Although the Nigerian government is pursuing legal action against Binance, Idris assured that the government remains committed to creating a regulatory environment that supports the growth of legitimate cryptocurrency businesses. The government’s primary goal is to balance the benefits of cryptocurrency innovation with the need to maintain financial integrity and security in the country.
The legal action against Binance follows a series of regulatory challenges faced by cryptocurrency exchanges operating in Nigeria. In 2021, the Central Bank of Nigeria (CBN) issued a directive that prohibited financial institutions from providing services to crypto businesses. This move was intended to curb the risks associated with unregulated digital currencies, but it also led to a decline in cryptocurrency trading activity within the country.
However, the government’s position on cryptocurrency has evolved over time. While it continues to regulate the space, it has also recognized the economic potential of digital currencies, particularly in a country where financial inclusion remains a challenge. According to recent reports, Nigeria ranks as one of the top countries in Africa for cryptocurrency adoption, with millions of Nigerians investing in digital assets.
In response to growing interest in cryptocurrency, the Nigerian government has initiated efforts to create a framework for regulating the industry. These efforts include the introduction of guidelines for cryptocurrency trading and a potential Central Bank Digital Currency (CBDC), known as the eNaira, which was launched in October 2021. The eNaira is a government-backed digital currency that aims to provide a secure and regulated alternative to private cryptocurrencies.
The government’s push for stricter regulation of cryptocurrency companies like Binance is part of a larger global trend to impose greater oversight on the industry. Many countries, including the United States and European Union members, have taken similar steps to regulate cryptocurrency exchanges and prevent illicit financial activities. As the global crypto market grows, the need for regulation becomes more urgent, especially as cryptocurrencies are increasingly used for cross-border transactions and investment.
The legal battle between the Nigerian government and Binance is expected to have far-reaching implications for the future of cryptocurrency in the country. While the lawsuit may have created tensions between the government and the crypto community, it has also brought attention to the need for clearer regulations in the sector.
The Nigerian government’s approach to cryptocurrency regulation is likely to continue evolving as the industry grows. While the government has expressed its openness to the use of cryptocurrency, it is also clear that it will not tolerate unregulated operations that may compromise the country’s financial stability and security. As such, cryptocurrency companies operating in Nigeria are being urged to adhere to the country’s regulations to avoid similar legal challenges in the future.
For now, the government remains focused on ensuring that cryptocurrency operations in Nigeria are properly regulated to prevent misuse while fostering innovation. The legal case against Binance is expected to be a significant test of Nigeria’s regulatory framework for cryptocurrencies and could serve as a blueprint for future actions in the sector.
