Crypto has captured the hearts of Nigerians, prompting the government to launch a crackdown

In a shocking turn of events, the Nigerian government has charged two senior executives of Binance, the world’s largest crypto exchange, with tax evasion totaling $26 billion. The Nigerian regime is demanding that Binance pay a fine of $10 billion for the tax evasion attributed to it. One of the managers managed to escape from arrest after reports surfaced in the state. The government is trying to recover billions from the crypto company.

Despite Nigeria being a leading country in the adoption of digital currencies, including cryptocurrency, every 1 in 10 Nigerian citizens owns crypto, similar to countries like Russia or India. The popularity of crypto in Nigeria can be attributed to the devaluation of its local currency, naira. However, this has led to measures being taken against Binance as the Nigerian economy struggles to meet its population’s needs despite its strong African economy status.

Ilan Shterek, CEO of Horizon in Altshuler Shachem explains that Nigeria began limiting cash withdrawals from ATMs a year ago to reduce capital outflows outside the country. This move was aimed at reducing inflation and stabilizing the economy but also limited access to digital currencies like Bitcoin and Ethereum for many citizens who relied on these platforms for transactions and investments.

The recent cancellation of fuel subsidies by new President Buhari’s administration in 2022 exacerbated the economic crisis, leading to a drop in purchasing power among Nigerian consumers. As an alternative, many have turned to digital currencies as they seek to preserve their capital value when traditional banking options become increasingly unstable due to inflation and economic instability.

This has made Nigeria one of Africa’s largest trading volumes for cryptocurrencies on decentralized exchanges such as Binance. Despite this trend, however, there are concerns that crypto exchanges establish independent exchange rates for local currencies like naira further devaluing it with no regulation over them by authorities such as Central Bank of Nigeria (CBN) or Securities and Exchange Commission (SEC). In this regard, Binance is at the center of attention as it is currently facing charges related not only to tax evasion but also potential regulatory issues related to its operations within Africa’s biggest market for digital assets.

It should be noted that Binance has had past issues with regulators worldwide; one notable case was a US tax evasion case that resulted in a settlement and ban on activities within Western countries.

Recent arrests without charges against Binance managers have raised concerns about potential diplomatic fallout between Nigeria and other countries where binance operates such as US and UK governments.

One manager remains in custody while Interpol has been asked to issue a global arrest warrant for another who escaped custody amidst fears he may seek refuge abroad.

As such, this situation continues unfolding in Nigeria while authorities grapple with balancing control over flow of capital along with allowing accessibility through innovative technology while adapting regulations accordingly.

By Samantha Johnson

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