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A Nigerian parliamentary committee has recommended that an arrest warrant be issued for Binance CEO Richard Teng on charges of tax evasion, money laundering and terrorist financing.
On Monday (March 4), the National Assembly Committee on Financial Crimes responded to a petition from two civil society organisations, which accused Binance of defrauding Nigeria of billions of dollars.
In December last year, the committee sent a letter to Binance requesting that Teng appear in person to face questioning; however, he did not attend the hearing.
In his place, Binance sent local attorney Senator Ihenyen, who asked for the committee’s understanding due to the “very difficult situation” the company is currently facing.
Ihenyen reminded the committee that, last week, two other Binance executives had travelled to Nigeria and had been detained upon arrival.
“For this reason, it has been extremely difficult for the global board of Binance to mobilise other executive members of the company to Nigeria, because there is genuine concern about their safety and security,” he said.
“This is the situation that we have been forced to contend with — it is not a show of any disrespect in any way to this honourable house.”
Last week, when the story of the two executives first broke, it was unclear whether they had been detained for questioning or arrested.
According to Ihenyen, the two executives — an American and a British-Pakistani — were arrested by the office of Nigeria’s National Security Adviser.
The committee asked Ihenyen whether the two executives had travelled to Nigeria to respond to the petition and answer the allegations against the company.
Ihenyen said the reason for the visit had “had not been expressly communicated” to him and he did not know why they had come to Nigeria.
Ihenyen was then accused of “waffling” and talking “Bi-nonsense” — a turn of phrase that one committee member used several times.
Finally, committee chair Ginger Onwusibe expressed doubts as to Ihenyen’s account of the arrests, describing this claim as a “rumour” spread by Binance.
“Until we get a formal written letter from the NSA, we don't know anything about this arrest,” said Onwusibe.
The committee then proposed that the National Assembly should issue a warrant for the arrest of Teng and other Binance executives, and the proposal was unanimously approved.
“This grievous financial crime has been going on in this country for more than six years now,” said Onwusibe.
“Binance has no less than 20m Nigerians on their platform, and you have exploited them.
"For us, our duty is to ensure that justice must be met for both Nigeria and Nigerians.”
Binance prepares to dump the Nigerian naira
Following the hearing, some members of the committee spoke about fraud and money laundering allegations against Binance.
One member drew attention to ransom payments that have allegedly been channelled through the Binance platform, following kidnappings in the Niger Delta region.
But in contrast to last week, there was less mention of currency manipulation in lawmakers’ latest statements.
Nonetheless, Binance seems to have taken last week’s criticism on board, as this week it announced that it will discontinue all naira trading services due to “ongoing regulatory conflict”.
On Friday (March 8), Binance ended naira withdrawals and automatically converted all naira balances to Tether's USDT stablecoin.
“Users are encouraged to withdraw NGN, trade their NGN assets or convert NGN into crypto prior to the discontinuation of these NGN services,” the company said in a statement.
Naira deposits were already discontinued on Tuesday (March 5).
The removal of naira services follows a pattern that will be familiar to users of Binance in other jurisdictions.
In 2023, Binance stopped handling deposits and withdrawals in local currency in the UK, US, EU and Australia, due to a mixture of regulatory investigations, enforcement actions and loss of banking partners.
However, what differs in Nigeria’s case is the allegation of currency manipulation and the claim that Binance has destroyed the value of the naira.
A long way down for the naira
Since the end of January 2024, the naira has lost approximately 47 percent of its value against the US dollar, and since June 2023, it has lost about 73 percent.
Rho Rider, a crypto compliance researcher, documented that in July 2023, Binance began “pumping” the USDT/NGN exchange rate, causing it to climb above the USD/NGN exchange rate.
Source: Rho Rider/TradingView
In other words, when priced in naira, Binance was making Tether more valuable than the US dollar, the value it is supposed to represent.
This incentivised traders to load up on Tether, which in turn carried its price higher while the naira fell lower.
This continued into late February this year, albeit with a flash crash in November last year, when the USDT/NGN exchange rate suddenly returned to fair value.
Around that time, Binance’s former CEO Changpeng Zhao tweeted a no-context emoji of a Nigerian flag, after which the USDT/NGN exchange rate regained its premium and continued higher.
“It seems the Binance Nigeria currency manipulation charges could actually hold water — this would be very serious,” said Rho Rider.
“Clearly, CZ [Changpeng Zhao] knew what was going on here.”
As for Binance’s plans to swap all remaining naira on the platform for Tether, Rider described this as “stealing” what local currency Binance can get hold of.
The automatic swap from naira to Tether will do little to assuage allegations that Binance has facilitated money laundering and capital flight in Nigeria.
Last month, Nigerian central bank governor Olayemi Cardoso said that $26bn of “untraceable” funds had passed through the Binance exchange in 2023.
And, according to a presidential advisor who spoke with BBC Nigeria last week, the federal government will demand $10bn in compensation from Binance.
