How The Spat Between Africa’s Top Economy & World No.1 Crypto Firm Escalated

Nigeria’s rift with Binance, the world’s largest cryptocurrency exchange, has escalated, drawing attention to the murky intersection of crypto regulation and international diplomacy.

The saga began with Nigeria’s pursuit of information from Binance, including details on its top users and transaction history. This move, aimed at curbing alleged illicit financial flows, devolved into the detention of two Binance executives, now identified by WIRED as Tigran Gambaryan, a US citizen and Nadeem Anjarwalla, a dual citizen of the UK and Kenya. Both officials had flown into Nigeria for negotiations after a government order blocked access to Binance and other crypto sites in Nigeria.

Gambaryan, a former US federal agent renowned for his role in high-profile cryptocurrency investigations, was leading Binance’s criminal investigations team. Anjarwalla, on the other hand, served as Binance’s regional manager for Africa, overseeing operations in the continent.

Their detainment, which commenced on February 26, raised eyebrows globally, as neither Gambaryan nor Anjarwalla was formally charged with any crimes. Instead, they find themselves caught in the crossfire of Nigeria’s broader crackdown on cryptocurrency exchanges.

Nigeria’s central bank expressed concerns over tax revenue losses from unregistered crypto exchanges and accused Binance of facilitating illicit financial activities, amounting to a staggering USD 26 B.

Cryptocurrency adoption is on a fast rise in Nigeria as Africa’s largest economy grapples with a weakening currency and soaring inflation. There, the volume of crypto transactions grew 9 percent year-over-year to USD 56.7 B between July 2022 and June 2023, according to a report by Chainalysis, a notable New York-based blockchain research firm, placing Nigeria among crypto markets globally.

The situation further escalated with Nigeria’s decision to ban cryptocurrency exchanges, blaming them for the devaluation of the national currency, the naira. Industry stakeholders reject this notion, contending that “crypto is a convenient scapegoat for Nigeria’s self-inflicted economic problems.”

Despite efforts from Binance to collaborate with Nigerian authorities and ensure the executives’ safe return, the standoff persists. Binance refrained from commenting on the accusations or demands made by the Nigerian government, choosing instead to focus on working towards a resolution.

The detention of Gambaryan and Anjarwalla underscores the challenges faced by cryptocurrency exchanges operating in regulatory grey areas. The situation also highlights the complexities of international relations in the digital age, where technology and finance intersect with legal and diplomatic realms.

In November of the previous year, Binance entered into a settlement agreement with American prosecutors. Under the terms of the deal, Binance consented to pay a historic USD 4.3 B settlement to resolve allegations of money laundering. Additionally, the agreement mandated Binance to undergo rigorous and continuous oversight from US regulatory authorities.

As the standoff in Nigeria continues, anxieties mount for the families of the detained executives, who plead for their safe return. Gambaryan’s wife described the ordeal as the “hardest days” of her life, while Anjarwalla’s wife emphasized his role as a devoted husband and father, urging authorities to allow him to come back home, reports WIRED.

With the situation at a standstill, the fallout between Nigeria and Binance serves as a cautionary tale, illustrating the potential consequences of regulatory clashes in the rapidly evolving landscape of cryptocurrency and digital finance.

Featured Image Credits: Coinpaprika