The saga, which started as a routine meeting to address concerns about tax violations, has snowballed into an international legal battle between Nigeria and Binance along with its two executives. This case raises questions about the accountability of cryptocurrency platforms and the enforcement of global financial regulations.
The Beginning
In early January, Tigran Gambaryan, head of Binance’s Financial Crime Compliance team, Nadeem Anjarwalla, Regional Manager for Africa, and other colleagues traveled to Abuja, Nigeria’s capital. Their purpose was to engage in a meeting with Nigerian officials who were expressing concerns regarding alleged tax evasion and money laundering activities by Binance.
During the January 8 meeting, Nigerian legislators presented a list of accusations against Binance, encompassing tax evasion, money laundering, and other transgressions. Seeking resolution, the Binance delegation inquired about addressing these concerns. Legislators advised them to liaise with the Nigerian tax authority. Peter Aniekwe, a Nigerian lawmaker, cautioned that settling was preferable, hinting at potential consequences if unresolved. This warning instilled profound fear among the Binance employees.
Later that night, a local Nigerian lawyer retained by Binance disclosed that settling the company’s legal predicament in Nigeria could exceed $100 million. Fearing for their safety, the delegation hastily departed Nigeria.
Binance Executives Detained
On February 26, Gambaryan and Anjarwalla revisited Nigeria to discuss the decision to prohibit the crypto trading platform Binance with the authorities. Upon their arrival, Nigerian officials promptly detained the two Binance executives and confiscated their passports. Subsequently, they were escorted to a residence close to the headquarters of Nigeria’s National Security Adviser.
Zakari Mijinyama, a spokesperson for the National Security Adviser, clarified that the detention of the executives was not considered an arrest but rather part of ongoing discussions and meetings. Furthermore, the country’s Securities and Exchange Commission affirmed that Binance had been operating without authorization as a crypto exchange since the previous year.
Nigeria boasts the largest crypto economy on the African continent in terms of trade volume, with many citizens utilizing crypto to mitigate the effects of their local currency’s high inflation. The country’s currency, the naira, has experienced a significant devaluation of 70% against the dollar. Olayemi Cardoso, Governor of the central bank, alleged that Binance had enabled the movement of more than $26 billion worth of untraceable funds.
We are concerned that certain practices go on that indicate illicit flows going through a number of these entities and suspicious flows at best. In the case of Binance, in the last one year alone, $26 billion has passed through Binance Nigeria from sources and users who we cannot adequately identify.
Detainment And Escape
On February 28, a local court issued a decree granting Nigeria’s Economic and Financial Crimes Commission (EFCC) permission to detain the two Binance executives until March 12, a total of 14 days. Subsequently, on March 20, their detention was extended despite the absence of formal charges against them. Concurrently, Binance announced the suspension of all naira services by March 8, urging clients to withdraw their assets by then.
On March 22, legal representatives informed both Gambaryan and Anjarwalla of impending criminal charges from the court. The following day, Gambaryan was surprised to discover Anjarwalla’s escape from detention. According to a local newspaper report, the guards escorted Anjarwalla to a nearby mosque for Ramadan, where he successfully fled.
A spokesperson for the National Security Adviser disclosed that the individual accountable for overseeing Anjarwalla’s custody has been apprehended and is presently under investigation. Efforts are underway to procure an international arrest warrant for Anjarwalla by the country’s security agencies.
Charges Against Binance and Executives
On March 25, 2024, Nigeria lodged tax evasion and money laundering allegations against Binance and two of its executives, Tigran Gambaryan and Nadeem Anjarwalla. The Federal Inland Revenue Service (FIRS) disclosed the charges, which were formally submitted to the Federal High Court.
Binance faced four tax evasion accusations, encompassing Company Income Tax, failure to file tax returns, complicity in facilitating customer tax evasion via its platform, and non-payment of Value-Added Tax (VAT).
In an interview with CNBC, a Binance spokesperson acknowledged awareness of Anjarwalla’s absence from Nigerian custody, emphasizing the company’s primary concern for employee safety and ongoing collaboration with Nigerian authorities to address the matter.
On April 19, Gambaryan participated in the trial but refrained from pleading guilty. Furthermore, FIRS had not officially served Binance with the tax evasion charges. The FIRS lawyer proposed that Gambaryan, as an executive, should address the charges on behalf of the exchange. In response, Gambaryan’s lawyer objected, emphasizing that Binance, as the main defendant, must receive formal service before any plea can be considered. Consequently, the Judge adjourned the trial to May 17. Apart from the tax evasion trial, Nigeria’s EFCC also charged Binance and its executives with laundering more than $35 million, and the trial is set to resume on May 2.
Elahe Anjarwalla, Nadeem’s spouse, expressed heartache over Nadeem missing their son’s First birthday. Additionally, she asserted Nadeem’s lack of authority in high-level decision-making at Binance. She earnestly implored Nigerian authorities to persist in discussions with Binance.
Yuki, Tigran’s wife, pleaded for her husband’s return, emphasizing the increasing difficulty of maintaining daily life without their spouses present.
Conclusion
The events surrounding Binance’s exclusion and its executive’s detention in Nigeria underscore a complex intersection of legal, financial, and diplomatic challenges. As the legal processes continue, concerns about employee safety, charges of financial fraud, and the complexities of international laws are highlighted.
