On 28th February 2024, Nigerian authorities arrested Tigran Gambaryan, a former United States Tax agent who now works as the Head of Financial Crime Compliance at Binance. He was arrested alongside his colleague Nadeem Anjarwalla who is Binance’s Africa Regional manager.
The duo was arrested upon arriving in the country on an invitation by Nigerian authorities to iron out some issues as regards Binance and its operations in Nigeria.
The arrest of the duo made all the headlines in the global crypto industry with the Financial Times being one of the foremost news outlets to break the news. The arrest of the Binance Executives opened a new chapter in the subtle crackdown on crypto entities by the Nigerian state over allegations of currency manipulation and illicit practices on crypto platforms in the country.
The Nigerian state filed a case in court accusing Binance of Tax evasion and money laundering in a spat that has dragged on for five months now.
The case between Nigeria and Binance Ltd have been adjourned several times with Tigran Gambaryan firmly in custody following the successful escape of Nadeem Anjarwalla few days after the arrest of the duo.
Several attempts by foreign players to secure the release of Tigran Gambaryan has proved abortive as concerns over his health and safety are waived off by Nigerian authorities.
Since the beginning of the Spat with Binance, other crypto exchanges like Kucoin and OKX have since delisted Naira Peer-to-Peer trading on their platforms.
Nigeria’s Case against Binance
Nigerian authorities accused Binance, the largest crypto exchange in the world of being a willful tool for currency manipulators who are devaluing Nigeria’s local currency. The authorities blamed Binance for the free fall of the Naira in addition to charges of money laundering and tax evasion.
The nations’ Central Bank Governor Yemi Cardoso raised concerns about currency speculation on Binance while alleging that about $26 billion in untraceable funds was moved on Binance.
Nigeria’s foremost anti-graft agency Economic and Financial Crimes Commission (EFCC) in a separate case accused Binance of laundering more than $35 million through its platform while the FIRS alleged that Binance has not registered for remittances in Nigeria and are therefore guilty of Tax evasion.
Binance in response to the three-pronged attack by Nigeria’s top agencies delisted the Naira Peer-to-Peer feature on its platform.
Binance also accused Nigerian authorities of requesting a $150 million bribe to ease the situation during a previous visit in early January.
The five months following the arrest of the Binance executives have been characterized by back and forth between both parties.
Currently, the situation is tied in a dead lock with the continued detention of Tigran Gambaryan in Nigeria despite international pressure.
The Effect of the Binance Case on Nigeria’s Web 3 space
The Nigeria Vs Binance Saga blossomed into a big story in the global Web3 space as compliance remains a hot topic in the industry.
Various influential voices in the industry like Brian Armstrong of Coinbase joined the now global call for the release of the detained Binance Executive in Nigeria.
Earlier in the year, 12 retired Senators in the United States Congress penned an open letter to President Biden demanding action on the release of Tigran Gambaryan.
The spat between the two entities has created a negative perception of the Nigerian Web3 space as a risky place for foreign investors with potential hiccups stemming from harsh compliance laws and predatory government policies.
The conflict has sent a wrong signal to both foreign and local crypto investors about investing in the Nigerian space robbing the Nigerian Web3 scene of much needed investments and infrastructure for its continuous growth.
A lack of clear regulatory framework by Nigerian authorities poses a challenge to potential crypto investors and muddies the water for Nigerian crypto enthusiasts as well.
Hopefully, The Binance saga sparks a dialogue between Nigerian authorities and crypto entities that results to finding a middle ground that works for both parties.
Solution
Nigeria can borrow a leaf from Europe’s MiCA initiative to set aside a regulatory framework that works for the government, potential crypto entities and crypto enthusiast in the country.
Europe set up MiCA to regulate crypto entities within its jurisdiction and promote a Euro backed stable coin.
The ECOWAS member states can come up with its own regulatory framework for crypto entities within its jurisdiction. This will promote growth and innovation in the Web3 space of the ECOWAS member states which houses some of the fastest growing countries by crypto adoption in the world.
Finally, the Nigerian state can apply some diplomacy in the handling of the Binance case with the interest of the country’s young and growing Web3 space in mind.