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- Authorities are seeking to extend the detention of two Binance executives.
- Questions of illicit flows and market manipulation dog exchange in Africa.
- CEO Richard Teng is now confronting release of customer information.
Binance’s crisis in NIgeria just got worse.
A court ordered the crypto exchange on Monday to produce data on thousands of users in the African nation, according to a lawyer who attended the hearing and local media reports.
Binance, which has been embroiled in a high-stakes standoff with Nigeria’s central bank and security ministries for the last month, must turn over the customer data to the Economic and Financial Crimes Commission, the nation’s anti-corruption authority.
‘Tremendous distortions’
The EFCC has been leading a wide-ranging investigation of Binance in connection with what officials have said are billions of dollars in “illicit flows” moving through the crypto exchange, as well as suspected currency market manipulation.
The agency asked the Federal High Court of Nigeria to direct Binance to release user data as part of its investigation.
“The team uncovered users who have been using the platform for price discovery, confirmation, and market manipulation, which has caused tremendous distortions in the market, resulting in the Naira losing its value against other currencies,” the EFCC said in an affidavit seen by DL News.
Binance did not immediately respond to a request for comment.
At the same time, security officials are expected to seek a new court order this week to extend the detainment of Tigran Gambaryan, the US-based head of Binance’s financial crime compliance unit, and Nadeem Anjarwalla, a British lawyer and Kenya-based manager.
The two executives had arrived in Nigeria at the end of February to negotiate a resolution to disputes between the exchange and the government.
They were detained in a “guest house” managed by the security services after those talks broke down, officials told DL News.
Detained
Both men were held for a two-week period that ended last Wednesday. Neither has been charged with a crime.
The EFCC has applied to the courts for an extension and there will be a hearing on the matter on March 20, according to an official familiar with the matter.
A Binance spokesperson told DL News last week that the company is working with the authorities to resolve the matter and bring the two executives back home.
Meanwhile, the disclosure of user data poses a significant problem for a cryptocurrency exchange predicated on protecting the privacy of its users.
It also demonstrates the challenges confronting Binance CEO Richard Teng as he struggles to overcome challenges left by his predecessor, Changpeng Zhao.
Zhao designed Binance as a loosely organised group that disregarded orthodox business practices such as registering in markets where it serves customers.
‘Reasonable time’
Now that model appears to be backfiring. Zhao, known as CZ, pleaded guilty to violating US banking law in November in tandem with Binance’s agreement to pay $4.3 billion penalties.
With the court order, the EFCC investigators say they can proceed with their probe into the activities of alleged currency speculators and promised to conclude within “reasonable time.”
With reporting assistance from Liam Kelly.
Osato Avan-Nomayo is our Nigeria-based DeFi correspondent. He covers DeFi and tech. To share tips or information about stories, please contact him at osato@dlnews.com.