Binance gets shut down in Nigeria — but it’s the wrong Binance

Nigeria’s financial regulator last week ordered Binance Nigeria Limited to stop soliciting crypto investments from the public. Binance, the world’s biggest exchange, then told DL News that it has no links to that particular entity.

The details are murky, but Nigeria’s regulatory body — also called the Securities and Exchange Commission but with no ties to the American SEC — released a circular saying that it banned Binance Nigeria Limited from offering crypto trading and investments via its web and mobile platforms.

This led to reports that the country had banned the real Binance.

Binance is embroiled in a lawsuit in the US — America’s SEC claims Binance operates global entities that it claims are unaffiliated, but that are linked via its CEO, Changpeng Zhao. Binance has fought back against those charges, but in this case, filings show that Binance has no ties to Binance Nigeria Limited.

“The entity mentioned in the circular is not affiliated with us,” a Binance spokesperson told DL News.

The Nigerian SEC did not return a request for comment. It may have failed to recognise a tactic akin to domain squatting that is used by some in the country. The idea: Register a company using an already established brand. The aim is to create a corporate registration record that can then be sold to the real global outfit, should it choose to establish a presence in Nigeria.

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The person responsible for registering Binance Nigeria Limited is identified in public documents as Ahassan Ifzal Mughal, Esq., along with the title of Barrister, Solicitor & Advocate of the Supreme Court of Nigeria. Mughal confirmed to DL News that the company is not affiliated with Binance.

Mughal said that he registered the company for “arbitrage purposes” in the hopes that they could sell the incorporated name to Binance if Zhao’s exchange were to establish a local branch in Nigeria.

“We are willing to hand over full control of Binance Nigeria Limited to binance.com should they choose to legally enter into the Nigerian market, and are further available to provide our legal services to them in obtaining legal regulatory compliance in Nigeria,” Mughal said in an email.

Nigeria’s corporate registry web site currently lists four entities with “Binance” in their company names. One such entity — Binance Exchange Limited — was registered by an individual who has also registered at least 10 other crypto-linked companies.

Some of the registered companies tied to this person include OKX Nigeria Limited, Paxful Nigeria Exchange Limited, FTX Nigeria Limited, Huobi Limited, and Coinbase Limited, among others.

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Binance Nigeria Limited was registered with Nigeria’s Corporate Affairs Commission — the country’s corporate registry — in December 2019. The registration is currently listed as inactive on the commission’s website.

An estimated 22 million Nigerians — about 10% of the country’s population — own crypto despite a 2021 central bank ban that prohibits banks from servicing crypto exchanges.

Nigeria’s crypto ownership is driven by mounting inflation and stringent forex controls. The country’s annual inflation rate is 22%, its highest level in almost 20 years.

This has caused the country’s currency, the Naira, to lose its value relative to the US dollar. As such, stablecoins like Tether USD are seen as viable means to protect wealth, especially with forex hard to come by for average citizens.

Nigerians can access Binance, which means it doesn’t need to establish a local presence.

The exchange remains one of the more popular avenues for peer-to-peer crypto trading in Nigeria. Binance’s prominence has risen further amid the collapse of Paxful, which was a major P2P crypto trading arena.

Paxful had 1.5 million Nigerian users before it shut down operations in April.