In brief
- Binance Uganda will not allow trades after November 11.
- Binance.com now accepts Ugandan shillings, making the local exchange redundant.
- CEO Changpeng Zhao called Binance Uganda a "loss center."
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Binance Uganda, Binance’s early foray into the African market, is closing all trading services on November 11 after halting deposits last week. Binance had earlier announced the shuttering of Binance Jersey, its exchange in the British Isles.
The African exchange, which opened in October 2018, represented Binance’s effort to capitalize on cryptocurrency interest in a country where many families rely on cross-border remittances but are unable to get bank accounts. The world’s largest exchange used it as a jumping-off point to reach citizens across Africa.
Ugandan users of the exchange are being asked to switch to Binance.com, which now accepts deposits of Ugandan shillings via Mobile Money, credit and debit cards, and bank transfers.
According to Binance CEO Chenpeng “CZ” Zhao, the consolidation of its Jersey and Uganda exchanges is a “business decision” as fiat deposits of Ugandan shillings have since been added to Binance’s global exchange along with bank transfers.
“All the features that Binance Uganda provides [are] now covered by Binance.com together with our fiat channel partners,” Zhao told Decrypt. “There's a very minimal number of users on there, so it doesn’t make sense for us to maintain two platforms.”
Yet, thus far at least, Binance is sticking with its other local exchanges, including Binance Singapore. And it recently announced Binance Turkey.
For those looking for an ulterior motive, especially in light of a recent Forbes report claiming Binance used its US affiliate to evade regulations, Zhao was quick to assert otherwise.
“Some people misinterpreted that as maybe we got into trouble with the regulator locally or something,” he told Decrypt, referring to the closure of Binance Jersey and Binance Uganda. “And that's not the case. We do have good relationships with regulators in both areas that we have an exchange winding down. It's just a business decision.”
Nonetheless, questions remain. Zhao referred to Binance Uganda as an “independent exchange,” but that seems to be from an operational standpoint, rather than a structural one. For instance, after a 2019 security breach that resulted in $40 million in losses, Binance Uganda told users their funds “are safe and segregated from Binance.com.”
Moreover, Binance Uganda further asserted its independence in September, causing a small stir when it delisted the Binance Coin (BNB), claiming it didn’t meet its trading standard.
Whatever decisions were being made—and by whomever—they weren’t enough to keep Binance UG profitable. “It's a loss center for us because it's not generating enough money to be profitable,” said Zhao, “and everybody uses Binance.com anyway.”
But cryptocurrency is supposed to be profitable in Africa, though there’s some anecdotal evidence that African crypto users prefer peer-to-peer trading because it cuts down on commissions to centralized exchanges.
Hoping to make inroads with middle-class African users, Binance yesterday launched an affiliate program that rewards African users in Nigeria, Ghana, Kenya, South Africa, and Uganda for getting people on to the exchange.
According to Binance Uganda’s closure announcement, users have until November 11 to finish trading and until November 28 to login and withdraw funds.
Adriana Hamacher contributed reporting.