Binance on Trial: Nigerian Prosecutors Target Exchange and Executives Alike in Criminal Trial – Unchained

Binance Holdings Ltd and two executives, Tigran Gambaryan and Nadeem Anjarwalla, were set to be arraigned on Thursday on charges related to money laundering and tax evasion in the Federal High Court in Abuja, Nigeria. However, procedural issues in the case have prompted the court to delay the arraignment until April 19.

Set against a dramatic currency crisis, the country’s enforcement actions against the world’s largest crypto exchange have attracted international attention. Crucially, Binance itself has also been charged in the case on the same grounds as both executives, raising questions about the extent to which they are being held personally responsible for allegations against their employer.

Gambaryan and Anjarwalla were arrested by Nigerian officials in February and held without charges for several weeks. On March 28, Nigeria’s Economic and Financial Crimes Commission (EFCC) charged both individuals and the company with allegations involving money laundering of up to $35.4 million and operating a specialized financial business without the necessary licensing. It was later reported that the Federal Inland Revenue Service (FIRS) had filed separate charges related to tax evasion on March 25.

Read more: Binance Founder CZ’s Criminal Sentencing Date Postponed to April: Report

Gabaryan, currently in custody, is expected to appear in court; Anjarwalla, however, escaped on March 22 and will be arraigned in absentia. Nigerian authorities are reportedly in talks with Interpol regarding his extradition. However, according to a statement from Interpol, the international police organization “is not involved in the extradition process.”

Money Laundering, Tax Evasion, and Currency Crisis

The defendants were set to be arraigned Thursday on five counts related to money laundering. These charges include carrying on specialized business without valid license, engaging in business of other financial institutions without valid license, and conspiracy to conceal the origin of revenue derived from unlawful activities.

However, Gambaryan’s defense successfully argued that his client had not been properly served papers in custody, and therefore did not adequately understand the charges against him. As such, Gambaryan was formally served in court today, with his arraignment postponed until April 19. The defense also successfully argued that his employer, Binance Holdings Ltd. had not been properly served either, nor had Nadeem Anjarwalla, who escaped custody in March and remains at large. As such, these arraignments have also been postponed.

In a statement on Wednesday, Binance said that Gambaryan, despite his crucial role in improving the company’s compliance framework, should not be held accountable for the company’s decisions due to his lack of decision-making power within Binance.

“Binance respectfully requests that Tigran Gambaryan, who has no decision-making power in the company, is not held responsible while current discussions are ongoing between Binance and Nigerian government officials,” Binance wrote.

The crypto exchange also emphasized Gambaryan’s career background in law enforcement and regulatory compliance, writing, 

Tigran was hired in 2021 to help Binance fix past compliance issues. As the head of Binance’s Financial Crime Compliance (FCC) team, he has been a strong advocate for Binance to develop policies and build compliance capabilities that set new industry standards… while he has left official service of the U.S. government, he has remained fully committed to the role of law enforcement officer ever since, operating as a global advocate for good governance and transparent regulatory financial practices. 

Read more: Binance to Pay $4.3B Penalty to Resolve U.S. DOJ Criminal Investigation; Changpeng Zhao Resigns, Pleads Guilty to Money Laundering Charges

Gambaryan has responded to his arrest by suing Nigerian authorities for violations of fundamental human rights under the country’s Constitution. He is seeking an order of perpetual injunction against detaining him in relation to any investigations into Binance and has urged the court to order the authorities to issue a formal public apology.

Neither Binance nor Nigeria’s EFCC immediately responded to Unchained’s requests for comment for this story.

Political Entanglements

This case is set against a backdrop of Nigeria’s aggressive regulatory stance on cryptocurrency operations, reflecting broader concerns over the impact of these platforms on national financial stability and regulatory compliance. It is also set against a severe currency crisis triggered by a series of policy reforms, including a radical redesign—and backtracking on the redesign—of its currency, the Naira.

In October 2022, the Central Bank of Nigeria redesigned the Naira to feature higher-denomination notes and provided a limited, three-month window for people to exchange their old notes for the newer denominations. The decision was wildly unpopular and eroded confidence in the currency, a crisis that has worsened since May 2023, when newly-elected President Bola Ahmed Tinubu, a critic of the redesign, suddenly reversed it. 

Since currency devaluation is already a politically charged issue in Nigeria, some politicians have begun to point fingers at Binance for playing a role in the currency’s devaluation. In February, presidential advisor Bayo Onanuga voiced concerns on X that cryptocurrency-enabled forex trading on platforms like Binance posed an existential threat to the nation’s currency. 

In a lengthy post, Onanuga claimed that some traders, including opponents of the current administration, were taking advantage of the ability to trade Naira freely against USD-denominated stablecoins on Binance, circumventing strict restrictions against unregulated forex trading. He also criticized the exchange’s ability to effectively engage in currency markets, pointing out that its use was limited or banned in some of the world’s richest markets.

He wrote:

Binance which is blatantly setting exchange rate for Nigeria, hijacking [the Central Bank of Nigeria]’s role, is a cryptocurrency trading platform, and suffers access limitations from multiple jurisdictions, such as the US, Singapore, Canada and the UK….Binance, facing regulatory showdown in many countries, and causing disruptions in the currency market, should not be allowed to dictate the value of the Naira, not on its crypto exchange platform.

The Naira-Dollar manipulators

I chanced on an X post Tuesday night by one Brother Bernard @Mikael C Bernard who railed against what he called the order of the EFCC, NSA on Finance to set a cap on traders selling USD tokens for Naira equivalent.

He disclosed that token sellers… pic.twitter.com/c9YBjawJMz

— Bayo Onanuga (@aonanuga1956) February 21, 2024

In March 2024, a Nigerian court ordered Binance to provide the EFCC with data on thousands of Nigerian users. In its request, the EFCC wrote that it had “uncovered users who have been using the platform for price discovery, confirmation, and market manipulation, which has caused tremendous distortions in the market, resulting in the Naira losing its value against other currencies.” 

UPDATE (April 4, 2024 9:27 a.m. ET): This article was updated to reflect that the arraignments had been postponed from April 4, 2024 to April 19. It has also been updated to reflect comment from Interpol.