Legal Battle between Binance Executive and Nigerian Authorities
On July 5, Nigerian prosecutors continued their legal proceedings against Tigran Gambaryan, a high-ranking official at Binance, the world's largest cryptocurrency exchange. Since February, Gambaryan has been under detention by the Economic and Financial Crimes Commission (EFCC) in Nigeria.
The conflict initially arose from concerns related to currency manipulation but has evolved into a significant legal confrontation between Binance and the Nigerian government.
Genesis of the Dispute
The troubles started on February 20 when users of Binance in Nigeria encountered difficulties while trading USDT for the local currency, naira, on the platform's peer-to-peer (P2P) system. Following this event, Binance took measures such as limiting Tether (USDT) purchases with naira, disabling the 'Buy' option, and establishing a fixed exchange rate of 1,802 naira to USD to prevent fraud.
Subsequently, Nigerian authorities took action by blocking access to major cryptocurrency exchanges, including Binance, due to concerns about currency manipulation and potential money laundering activities. This action led to the detention of Binance officials Nadeem Anjarwalla and Tigran Gambaryan in Abuja, with an ongoing probe being conducted by the Office of the National Security Adviser.
By March 5, Binance decided to discontinue all naira-related services, which included halting deposits and withdrawals and removing naira trading pairs from its platform. Users were provided with a three-day window to withdraw or convert their naira balances to USDT.
Escalation and Legal Developments
On March 18, the EFCC obtained a court order requiring Binance to disclose information about its Nigerian users due to suspicions of money laundering and terrorism financing. Additionally, an inter-agency committee claimed that forex manipulation had contributed to the devaluation of the naira.
Nadeem Anjarwalla managed to escape custody on March 19 by utilizing his Kenyan passport during Ramadan prayers. Concurrently, the Federal Inland Revenue Service (FIRS) initiated legal action against Binance for alleged tax non-compliance in Nigeria.
The legal woes for Gambaryan intensified on April 8 when the EFCC added charges of money laundering, currency speculation, and tax evasion amounting to $34 million. Despite Gambaryan's plea to distance himself from representing Binance in court, the request was denied, leading to his transfer to the Kuje Correctional Center.
Binance's CEO, Richard Teng, expressed disappointment on May 7 regarding Gambaryan's prolonged detention, despite Binance's cooperation. There were also reports of a $150 million cryptocurrency payment demand by an unnamed Nigerian official, which Binance interpreted as a bribe. However, the Nigerian Ministry of Information spokesperson, Rabiu Ibrahim, refuted these allegations, labeling them as false and diversionary.
Industry Concerns
By June 14, the FIRS dropped charges against Gambaryan and Anjarwalla, shifting the focus solely on Binance through its local representative. This decision relieved Gambaryan from further court appearances.
The Blockchain Industry Coordinating Committee of Nigeria (BICCoN) cautioned about the negative impact of the legal dispute on Nigeria's blockchain sector. They advocated for a fair trial to restore investor confidence.
On July 2, Justice Nwite instructed the Kuje Correctional Center to release Gambaryan's medical records due to health concerns. Despite being a U.S. citizen, Gambaryan received inadequate medical attention despite his prolonged illness.
The legal proceedings against Binance and Gambaryan saw the completion of the first witness examination with the court adjourning the proceedings until July 5.
