Tech Safari Take: Binance's bitter breakup with Nigeria

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Alright, onto this week’s Tech Safari Take!

Two weeks ago, executives of Binance (the world’s biggest crypto exchange) were invited for a meeting with Nigeria’s government.

Instead of a meeting to see how they could work together, they were abducted detained by the Nigerian government and asked to pay a $10 billion fine for operating illegally within the country.

It’s a wild turn of events that has the world watching.

So how did we get here, and what does it mean?

I teamed up with Sheriff Alimi, the founder of Next Capital to explore the situation.

Let’s dive in.

The Backstory

For the past few weeks, crypto has been on a crazy run.

Bitcoin and Ethereum have hit all-time highs.

And the crypto bros are taking a breath and saying, ‘The market is finally back!’

Africa’s crypto space is also heating up in Nigeria - but for an entirely different reason.

See, after the biggest protest in the country in 2020, the Central Bank of Nigeria (CBN) created a ‘crypto ban’ to ‘prevent criminal activity.’

But crypto is a hard currency to hold back — and instead crypto transactions actually increased.

And at this point, Nigeria had two currency markets for its currency, the Naira:

• An official market - a rate that the Central Bank sets.

• A parallel (or black) market - made up of how the market really values the Naira.

Both markets also had different exchange rates at some point, with the black-market rate being much higher.

In May 2023, the government finally floated the currency, hoping both rates would converge and stabilise.

But even the unified rate kept going up and up.

The government needed someone to blame, and they started cracking down on different folks and pointing fingers.

Roadside vendors, banks, and speculators — no one was spared.

Their hot fingers eventually landed on Binance, with the CBN governor claiming that in 2023, $26 billion flowed into Nigeria through Binance.

Apparently.

But his words were strong enough to bring a few Binance executives to the country on invitation for a “meeting”.

But the meeting never happened.

Instead, two of them got arrested and had their passports seized.

Nigeria is asking for $10 billion in compensation, and Binance has ended all of its naira services on the platform.

The Context

Crypto is an exciting asset class to hold globally - but in Africa, it’s a real solution to real problems.

For instance:

• African currencies are losing value fast. People use crypto to protect themselves from this.

• Over 80% of all global peer-to-peer crypto payments under $1,000 happen in Sub-Saharan Africa. So crypto isn't just an asset in Africa, but also a mode of payment.

• Cross-border payments are slow, with some payment channels taking days to settle, while crypto settlements are instant. So, a lot of importers use them to pay for goods.

And Nigeria leads the pack when it comes to crypto usage.

Over 66% of African folks transacting with crypto are from Nigeria. That’s seven times the next country, South Africa.

African crypto companies get that, and they’ve built massive products with crypto.

But they all face one big bad problem — poor regulation.

Crypto regulation in Africa is in shambles, and Nigeria’s recent situation is a perfect example.

The Tech Safari Take

About 20% of African countries have banned crypto.

Kenya wants to tax crypto, while Morocco jailed a 21-year-old for buying a car with Bitcoin.

And now, Nigeria just kneecapped crypto by detaining Binance’s employees.

It means that Nigeria’s crypto startups are left wondering what their futures look like.

But we don’t think that will curb Africa’s use of crypto.

Crypto adoption on the continent has been driven by demand from young people who want to get paid and store money.

Even with crypto bans in the past, usage only surged.

With Binance mostly dead in Nigeria, people have moved to WhatsApp groups and Telegram bots to buy and sell crypto.

If we’ve learned anything from Nigeria’s crypto saga, it’s that even if the government tries to curb crypto usage, it won't slow down.

And if the Nigerian government invites you for a meeting… it could be a trap.

What do you think of Nigeria’s recent crypto situation and the future of crypto in Africa? Let us know here 👇🏽

3️⃣ things we’re reading this week

💡 Someone made an interactive museum of different startup ideas that have failed in the past. Check it out here.

📕 This week, we’re reading the story of the many friendships that started and built Paystack. Check it out here.

🤯 Did you hear about the product review that almost killed Fisker, the EV company? It’s wild. Read more here.

Tweet of the week

This week, Cognition Labs announced Devin, the world’s first AI software engineer. It can plan and build software on its own, and it has already completed a few jobs on Upwork. If you’re a software engineer, sh*t just got real. AI is definitely coming for your job. 🫵🏾

That’s a wrap! Hope you enjoyed our Tech Safari Take.

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