The United States dollar crashed against the naira at the cryptocurrency peer-to-peer market platform Binance, according to trade information seen by Nairametrics. As of 8 am on Wednesday, the dollar traded for as high as N1,415/$1 from as low as N1606/$1 within 24 hours. At the time of writing this story, the exchange rate was trading at N1,458/$1. Some traders also quoted above N1500/$1 as trading ramped up.

The sharp drop in the value of the dollar against the naira on Binance was attributed to the warning issued by the Central Bank of Nigeria (CBN) governor, Olayemi Cardoso, on Tuesday. Cardoso, at the Monetary Policy Committee (MPC) meeting media briefing, said that the CBN was concerned about the activities of cryptocurrency traders, especially on Binance, and that the apex bank was working with other agencies of the government, such as the EFCC, the Police, and the office of the NSA, to address the issue.

Cardoso also claimed that a staggering $26 billion has passed through Binance Nigeria in trades related to cryptocurrency transactions in the last one year alone, from sources and users who the CBN cannot adequately identify. He said that the CBN was determined to do anything it takes to take charge of the market and not allow others to manipulate it in a way that ends up distortionary and sub-optimizes for all Nigerians.

The statement made by the CBN governor appears to have rattled cryptocurrency traders, as the naira gained strongly against the US dollar on Binance. Some cryptocurrency traders also complained bitterly about the inability to gain access to the website, with outages or downtimes now being recorded frequently. However, the website can be reached via their mobile application.

Binance is one of the largest and most popular cryptocurrency exchange platforms in the world, with over 15 million users and a daily trading volume of over $20 billion. Binance allows users to buy, sell, and trade various cryptocurrencies, such as Bitcoin, Ethereum, Binance Coin, and Tether, among others. Binance also operates a peer-to-peer (P2P) market, where users can trade cryptocurrencies directly with each other, using local currencies, such as the naira.

The CBN has taken a negative stance towards cryptocurrency, citing concerns over its legality, security, and impact on the financial system. In February 2021, the CBN issued a circular that prohibited banks and other financial institutions from facilitating cryptocurrency transactions, effectively cutting off the users from the formal sector. This has caused confusion, panic, and frustration among the users, as well as the service providers, who have had to suspend or modify their operations.

In response, Binance stated that it has taken some actions to adjust trading on its platform by Nigerians to address what it described as an unusual currency movement. While many Nigerians have been facing restrictions with buying and selling USDT on the platform since Tuesday, Binance said its action was “to protect users and prevent any abuse.” The company also distanced itself from the forex debacle in Nigeria, saying its platform is “market-driven and not intended to be a proxy for currency pricing in Nigeria.”

The use of cryptocurrency in Nigeria has been growing rapidly in recent years, as more people are using it to store value, make transactions, and access financial services that are otherwise unavailable or costly in the traditional system. According to a 2020 online survey by data platform Statista, 32% of Nigerians who participated used cryptocurrencies - the highest proportion of any country in the world. Nigeria also ranked third in the world for trading volumes, generating more than $400 million worth of transactions in 2020.

However, the use of cryptocurrency in Nigeria also faces some challenges, such as regulatory uncertainty and hostility, lack of awareness and education, technical and infrastructural limitations, and security and privacy risks. Therefore, users and service providers need to be cautious and vigilant, and follow the best practices and tips to stay safe and secure in the crypto space.