How Binance’s dispute with Nigeria spiralled into a crisis of arrests and criminal charges

Binance is no stranger to regulatory crises. But its troubles in Nigeria have delivered plenty of drama, and more than a few bizarre twists.

Last Thursday, Nigeria’s anti-corruption agency charged Binance with money laundering at least $35 million in illicit proceeds on its platform.

This came on the heels of tax evasion allegations brought by Nigeria’s Federal Inland Revenue Service.

Meanwhile, Tigran Gambaryan, the company’s head of its financial crimes compliance unit, remains in custody in Abuja, and he, too, has been named in both criminal filings.

His colleague, Nadeem Anjarwalla, Binance’s Kenya-based regional manager, was also charged.

Daring escape

On March 22, Anjarwalla, a British citizen made a daring escape from Nigerian custody by slipping away from his guards following a Ramadan prayer service in a mosque and jetting away from the nation before the authorities could track him down.

Anjarwalla had apparently not surrendered his Kenyan passport when he and Gambaryan, a US citizen, were detained at the end of February.

If that wasn’t enough drama, Nigerian authorities ranging from the central bank governor to financial regulators to security personnel have depicted Binance as a rogue organisation wreaking havoc with the sovereign currency of Africa’s most populous nation and executing transactions for bad actors.

And Binance, in accordance with its longstanding practice, has largely remained mum with only a few public statements.

“While it is inappropriate for us to comment on the substance of the claims at this time we can say that we are working collaboratively with Nigerian authorities to bring Nadeem and Tigran back home safely to their families,” a Binance spokesperson told DL News in March.

The company did not respond to requests for comment on this article.

A pledge to comply

How did it come to this?

Four months ago, Binance pleaded guilty to violating US banking laws by allowing criminals and terror groups to use its exchange to facilitate illegal transactions and paid a $4.3 billion penalty. Co-founder and CEO Changpeng Zhao, who also pleaded guilty, resigned.

His successor, Richard Teng, said that the company had learned its lesson and was turning the page on its problematic past. He promised the company would focus on regulatory compliance.

And yet now the exchange, which has long cast itself as the talisman of the centralised crypto world, is embroiled in an embarrassing and damaging legal fracas with an influential nation.

And it isn’t the only one. The Philippines has also run out of patience with the crypto exchange’s penchant for operating in markets without a licence. Officials in the crypto-loving Asian nation blocked the crypto exchange last month.

Even so, Binance’s share of the crypto spot trading market has climbed to 38% from 31% during Teng’s tenure as CEO, according to CCData.

While the uptick may have more to do with the bull market than anything Binance is doing, the constant news about the company’s clashes with regulators across the world underscores the challenges the company is facing.

Currency freefall

Binance’s dispute in Nigeria began in late February when the government scrambled to address the freefall of its sovereign currency, the naira.

It had shed 90% of its value relative to the US dollar since the new administration came into office last May.

Officials from Nigeria’s central bank, economic ministry, and state security blamed alleged saboteurs for the ailing naira.

They pointed the finger at crypto trading platforms, especially Binance, and claimed there was rampant currency manipulation on those exchanges.

When Binance ran into trouble in Nigeria, state officials had to invite executives from outside the country for a meeting.

Binance denied any involvement in Nigeria’s currency woes and stated that it did not influence the market.

However, the government formed an interagency investigative committee led by the Economic and Financial Crimes Commission in collaboration with Nuhu Ribadu, the national security adviser.

The committee cut off access to the websites of Binance and several other crypto exchanges in Nigeria and vowed to uncover the identities of the alleged economic saboteurs devaluing the naira.

Binance is not registered in Nigeria but operates in the country by proxy with a litany of affiliate agents and marketers.

Deadlocked meeting

When Binance ran into trouble in Nigeria, state officials had to invite executives from outside the country for a meeting.

Binance sent two officials — Gambaryan and Anjarwalla.

Gambaryan is a former special agent of America’s Internal Revenue Service. Anjarwalla, a lawyer educated at Oxford and Stanford, is Binance’s African regional manager based in Kenya.

Both men met with Nigerian officials on February 28 but that meeting ended deadlocked. The government detained them in a guest house adjacent to the Office of the National Security Adviser.

Both Binance officials had their passports and phones seized by security officials who secured a two-week custody order from the courts.

With the executives in custody, Nigerian officials pressed them for information about prominent crypto merchants on its platform.

Both men refused, stating that they were not in the position to divulge such information, officials told DL News.

The country’s parliament demanded that Teng appear before a legislative committee.

Teng did not respond, at least not publicly.

Two-week detention order

Binance, meanwhile, delisted the naira as one of the supported fiat currencies on its platform and closed all of its services for users in the country.

The initial two-week detention order expired on March 12 but the government did not release the Binance officials. Instead, the EFCC applied for another 14-day custody of the two men.

The investigators scored a victory when it secured a court order last month mandating Binance to hand over customer details of its users in Nigeria to the EFCC.

Human rights lawsuit

Anjarwalla’s escape further exacerbated the situation, and embarrassed the Nigerian security forces.

He hasn’t surfaced and Nigerian authorities said last Monday that they are working with Interpol to return him to lawful custody in the country.

Last week, Gambaryan accused Nigeria’s government of violating his human rights in a lawsuit filed in the nation. Gambaryan’s lawyers said he is being held hostage by the government.

Meanwhile, court proceedings will begin on April 4 with a hearing on whether to extend Gambaryan’s detention and on the tax evasion matter.

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.