Today, we will discuss the Binance P2P shutdown and what happened.

It is no longer news that Nigerians cannot access P2P services on the Binance platform.

You will read about all that happened and if your funds are still safe in this post.

Without much adieu, let’s dive in.

Binance P2P: How It All Started (The Genesis Of It All)

Before I get to the Binance P2P and the Nigerian government shenanigans, I will give you the background gist of how Binance P2P came to be.

In 2016, awareness of Bitcoin and other cryptocurrencies started gaining momentum in Nigeria.

Then, to purchase Bitcoin, you must go to a broker exchange or meet individuals on Facebook or Telegram groups. 

They will tell you their rates and you will transfer the money into their bank account.

The individuals will source the Bitcoin and send it to your wallet address.

It is the same method when you want to sell. 

But there are problems with this:

• The individuals set the exchange rate
• The person you send your money or Bitcoin to can disappear with it 
• Someone might hack a bank account and send you money from it.

You will be left to face law enforcement agents as the perpetrator of the crime. 

A number of innocent crypto traders have served time behind bars because of this.

In 2017, Remitano came up with a solution to this – P2P.

It became the biggest crypto exchange and the biggest P2P exchange in Nigeria. 

Remitano provides the buyer and seller a Bitcoin wallet and a platform for the two to trade.

Then, act as the escrow and moderator. 

This is how P2P works:

Say Peter has 100,000 naira and wants to buy Bitcoin. He goes to P2P and sees many sellers.

He may decide to buy from Paul for any of these reasons:

• Paul sells at the best price, or
• He has done lots of trades, or
• He’s rated good by other buyers, or
• Maybe because both their names start with ‘P,’ and he is reminded of Psquare.

Whatever the reason, he clicks to buy 100,000 naira worth of Bitcoin from Paul.

As soon as this is done, that number of BTC will be moved from Paul’s wallet to the P2P escrow.

So, neither Paul nor Peter has access to the BTC now. 

Peter then transfers the 100,000 naira to Paul’s bank account and indicates that he has done so.

Once Paul receives the money, he clicks on ‘Release,’ and the Bitcoin moves from the escrow to Peter’s wallet.

If it happened that Peter did not send the money and indicated that he did, or Paul received it and said he did not, the trade goes into dispute.

The P2P exchange moderator will request evidence of payment and account statements from the two parties.

It will then release the BTC to whoever is telling the truth and probably ban the liar. 

If Peter also hacked the account he sent the money from, Paul would refuse to release the BTC since the account he received the money from is not the same name Peter registered on Remitano. 

He would request to send the money back to the same account.

If law enforcement comes, the exchange can provide Peter’s details because he completed full KYC before being allowed to trade on the exchange.  

So, P2P actually helps to protect the buyer and seller from scammers. 

Luno brought the next innovation, making it the second top exchange in Nigeria.

Luno made it even safer and easier to buy Bitcoin.

You can use your bank card or transfer to buy Bitcoin directly from the exchange. 

When you sell, you get the money straight to your bank account. 

Binance started gaining traction in Nigeria in 2018.

They provided sophisticated trade rooms, charts, numerous crypto pairs, and opportunities not present in Remitano or Luno. 

So people will buy from Luno or Remitano, and send to Binance to trade.  

In 2019, Binance integrated the naira onramp so you can pay with a card and bank transfer.

This move took a good market share from Luno.

Then in 2020, they integrated P2P. 

More exchanges sprang up, both Nigerian exchanges and international exchanges.

So everything was good until… 2021.

In February 2021, the CBN released a circular stopping all bank integration with crypto exchanges. 

It temporarily took Luno, Quidax, and many similar exchanges out of business, and many have not recovered. 

Every trader moved back to P2P, and USDT, the crypto version of the USD, became the hottest coin traded in P2P.

Only two exchanges were ready to capture the market – Binance and Remitano. 

Binance has now developed a superior product and the only competition was Remitano.

Because of the CBN policy, business thrived for Binance.

It became the biggest P2P exchange in Nigeria by trade volume. 

Other exchanges later started developing P2P, but Binance had already taken the market share.

And I would say its P2P was actually the best. 

So that is how Binance P2P came to be.

We will now get to what caused its shutdown.

Stay with me.

What Caused the Binance P2P Shutdown?

On Wednesday, February 28th, Nigeria banned Binance P2P.

If you go to the P2P section on Binance, you will no longer find Naira. 

Two Binance officials have also been detained in Nigeria with their passports seized.

Binance was first accused of being the reason for the ongoing continuous crash of Naira against the dollar.

The government also cited Binance as setting the FX rate for the naira, hijacking the Central Bank of Nigeria (CBN) role.

Olayemi, the governor of the Central Bank of Nigeria, told local media that $26 billion from unverified sources has passed through Binance Nigeria in the last year alone. 

Thus, Binance was fined $10 billion.

Following this, Binance blocked Nigerians from accessing its P2P services.

The exchange eventually delisted all NGN trading pairs from its platform on March 8th, 2024.

Now let’s look at the accusations critically. 

i. Is Binance the Reason for Naira Devaluation? 

Binance does not set the price of Naira in its P2P. Binance P2P is just a platform that enables buyers and sellers to set their prices and trade. 

That is not even the problem.

In Nigeria, it’s not easy to access the dollar.

If I want to buy dollars, I must go to the Bureau de Change. That is Aboki man on the street. 

If I work for an international organization and get paid in dollars, I have to do the following to access my money:

• go to the bank
• withdraw the dollar, and
• go to my aboki friend on the street to sell it for naira. 

But why can’t I do this in the bank?

The CBN does not allow the bank to do the exchange for its customers.

Rather, they give it to the Bureau de Change at a much-reduced rate; they can sell at a much higher rate to make a profit. 

Now, that has never made sense to me. If you’re an expert on this, you can leave me a comment explaining how this works.

Let’s continue with the post.

In contrast to the Bureau de Change, I can stay in my house and buy/sell USDT on P2P within 15 minutes. 

I spoke to a full-time P2P trader who pointed out one way that the price of USDT could be manipulated on P2P that might lead to naira devaluation.

This is what he said: 

In the P2P market, there are two categories of people – The Makers and The Takers. 

The Makers are the buyers and sellers that place the buy/sell ads.

The Takers buy/sell at the prices set by the Makers. 

Let’s say the naira is selling at NGN1600/$1.

If there are, say, 10 makers who place an ad that they are buying at 1600/1, it means that the 1st to the 9th traders’ orders need to be taken before the 10th trader. 

If the 10th trader wants to jump this queue and sell off because he cannot wait, he can place his buy ad at NGN1650/$1. 

Sellers would then sell to him first because they are selling at a higher price. 

Then, sellers making trades might want to sell at a higher price. 

You then go to the Aboki on the street, and he says he is buying at NGN1600/$1.

When he learns that Binance is selling at NGN1650/$1, he also increases his selling price to be at par with the exchange. 

Whereas, what this 10th trader does sometimes is that when a seller takes his trade, he goes to the chat to negotiate at the real rate – NGN1600/$1, that he just wants his trade taken. 

This is my P2P friend’s argument.

Even if this is the case, it is the symptom, not the cause.

This is what I mean.

In Nigeria, a lot of people get sick with Malaria; some of the symptoms include fever or blisters in the mouth. 

Nigeria’s banning of Binance P2P is like taking Paracetamol to calm the fever or rubbing Vaseline on the blister instead of treating malaria or preventing mosquito bites in the first place. 

I think it is rather shameful that Nigeria is blaming Binance.

Besides the naira, many fiat currencies, including the Ghana Cedis and even the US dollar, are still trading on Binance P2P at this very moment.

Why hasn’t Binance devalued the currencies of these countries? 

In 1976, the naira was trading against the dollar at 0.62 naira per dollar.

In 2018, it was trading at 360 naira per dollar. That is a 580 times devaluation before the existence of Binance. 

In September of 2021, Nigerians accused AbokiFX, the online site that provides the daily FX rate, of being the cause of devaluation.

What had been devaluing the naira before AbokiFX launched in 2014? 

Again, this is playing the blame game and making things worse. 

Now let me paint you another picture of what might be the cause…

Demand and supply make an asset rise or fall in a free market. 

When demand exceeds supply, the asset rises; when supply exceeds demand, the asset falls.

In 1985, the naira traded at 1 to 1 with the dollar. So, 10,000NGN was $10,000.

Let’s say your grandfather kept 10,000NGN to be given to you in 2024. What you could do with it now is to buy meals.

But if he had converted that money to dollars and given it to you in 2024, you could buy a car with it. 

What I am saying is that government policies have continued to devalue the naira, and the poor masses are getting poorer, not by their doing.

And they want you to keep on holding the naira.

That is why they make it difficult for you to convert your naira to dollars.

But cryptocurrencies give anyone an equal opportunity to preserve the value of their money.

Trying to stop crypto in not the solution, people will always find a way.

The solution is looking for ways to give naira organic value.

In my opinion, if Nigeria wants to get the Naira strong, these two things could help: 

• There should not be a CBN rate that is only accessible to the Bureau de Change and a black market rate that is accessible to the rest of the country. There should be one rate – the market rate. I should be able to sell or buy the dollar at the bank at that rate. This way, even if there is a slight increase in P2P, the arbitrager will bring it down to the rate at the bank.
• Provide an enabling environment for Nigeria to become a producing country in terms of physical and digital products and services. These will be exported to earn a dollar, which would be sold for naira, thereby putting buying pressure on the naira, which in turn will appreciate the naira.

ii. $26 Billion Flowed Through Binance in 2023

The second accusation was by the CBN governor.

He said that $26 billion of unidentified funds flowed through Binance Nigeria in the past year.

The insinuation is that the unidentified fund may be laundered money or sponsoring terrorism. 

Let me lay down some facts.

According to Chainalysis, $31 billion was laundered through crypto globally in 2022 and $22 billion in 2023.

That same year 2023, $800 billion was laundered globally so crypto is just 2.75% of this and it’s dropping.

Because crypto is traceable, it’s easy to track the movement of money through crypto than tracking cash.

There are two things I want to point out here about the $26 billion. 

• It might be the trade volume. If I have $1000 and buy and sell with it 100 times in one year, that is a trade volume of $1 million. It does not mean that I have $1 million. If 2600 of us do this, that is 26 billion. 
• The second is that a lot of business people use it. It’s easier to convert naira to USDT and pay for your containers than to go through Bureau de Change, then the bank, and eventually taking 2 to 5 days to get to its destination.

But all this can be transparent. 

If Nigeria chooses to work with the exchanges instead of chasing them away, there will be no unidentified money.

Exchanges would provide the details of its Nigerian customers.

First was the ban in 2021 – that only pushed people to P2P.

It didn’t stop or slow down involvement in crypto.

It only stopped a way for the government to track and possibly regulate the flow of naira to and from the exchanges.

This is like shooting yourself in the leg.

Now, it is the P2P ban. Nigerians can no longer access the Binance P2P platform.

But what becomes of those people that still have their funds there?

I will talk about that in the next subheading.

Binance P2P Shutdown: Is My Money Safe?

Answer: Yes… Your money is safe.

What Binance did was to delist all NGN trading pairs and stop NGN P2P; it did not stop rendering crypto services altogether.

The exchange sent out emails regarding this on the 7th of March 2024, asking users to withdraw their funds.

For those who still have NGN on Binance, it will convert the balances in their Spot and Funding wallets into USDT at a ratio of 1 USDT = 1,515.13 NGN after 2024-03-08 08:00 (UTC).

So you still have your funds there but in USDT now.

If you want to transfer money from Binance to your bank account, there are many other P2P platforms that you can use.

In my next post, I will show you how to remove your money from Binance and transfer it to other platforms.

Let’s get to the concluding part.

Conclusion

We’ve come to the end of today’s post. Hope it was a worthy read.

Banning Binance will not deter or stop Nigerians from getting involved in crypto.

It is now the go-to global economy.

It has liberated a lot of Nigerians from poverty and brought foreign exchange to the country. 

This will instead result in Nigeria being treated more unfavourably or second-class on these exchanges, just like we have with PayPal.

But crypto is one ever-evolving field I know.

Who knows, a new technology may come up that will enable Nigerians to access dollars easily.

Or, maybe another exchange might just spring up and take over the Nigerian crypto market.

We will have to keep our fingers crossed to see how this plays out.

If you’re yet to join our crypto learning school, Afibie, do so at once and learn the rubrics of crypto.

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Till my next post, hodl on… Don’t fade!

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