Original author: Richard Teng
Compiled by: Odaily Planet Daily Azuma
As you may know, our colleague Tigran Gambaryan has been detained by the Nigerian authorities for over 70 days. This incident has sparked many public comments, and I would like to take this opportunity to clarify some facts to prevent the public from unfairly distorting their views on this matter. In addition, I also believe it is necessary to express some opinions on behalf of a global business organization - inviting employees of a company to participate in a meeting for the purpose of assisting in policy-making, but detaining them, sets a dangerous precedent for all global companies.
First of all, I would like to introduce Tigran. Since I joined Binance, I have further understood and admired Tigran more and more. However, ironically and unfortunately, this top global financial crime fighter, who is widely acclaimed in both the private and public sectors, has been detained in Nigeria for over two months for some far-fetched reasons.
Tigran has devoted his entire career to combating financial crime. His ten years of service in the Federal Police were documented in the book "Tracker in the Dark: Global Operations to Hunt Cryptocurrency Crime Leaders," and we also published a blog a few weeks ago further sharing his outstanding achievements in crime fighting.
After leaving the position of Special Agent in Charge at the US Internal Revenue Service, Tigran joined Binance, continuing his work as always. Tigran realized that working for the largest company in the emerging cryptocurrency industry would be more effective in combating bad actors and maintaining the stability of the market. Anyone who has transitioned from the public service sector to the private sector can tell you that sometimes working for a large private company can have a greater positive impact.
With this background, Tigran was hired by Binance in 2021 to help us establish and strengthen law enforcement cooperation, prevent financial crime, and other compliance matters. As the head of Binance's financial crime compliance team, Tigran has been a staunch advocate for Binance in policy-making and compliance, setting new standards for the industry. During 2022 and 2023, Tigran's team assisted global law enforcement agencies in freezing and seizing assets worth over $2.2 billion, including over $285 million in funds frozen in cooperation with US agencies such as the FBI, Department of Justice, and the Drug Enforcement Administration.
It is worth noting that Tigran did not go to Nigeria as a "decision-maker" or "negotiator"; he only went as an expert in financial crime and policy-making.
Local Regulatory Background in Nigeria
I believe revisiting some stories will help everyone reconstruct our history of activities in Nigeria. In fact, this story began nearly two years ago.
2022-2023
In May 2022, the Securities and Exchange Commission of Nigeria (referred to as SEC below) issued regulatory provisions for digital assets, bringing cryptocurrencies under its regulatory purview. The regulations required cryptocurrency exchanges operating in Nigeria to obtain SEC licenses and comply with certain requirements, however, these regulations failed to clearly articulate some key licensing requirements (such as application processes, licensing fees, etc.), effectively making it impossible to apply for a license.
Binance proactively contacted the SEC multiple times, seeking practical guidance on the licensing process and proposing consultative exchanges with Nigerian authorities.
For example, in a letter dated June 22, 2022, Binance stated: "We welcome and appreciate the opportunity to work with the SEC and other industry participants in the Blockchain Alliance to further clarify the application of the new rules in the coming days, especially the position of the Central Bank of Nigeria on the rules, the fee structure for registration, and the impact of registration on the facilitation of regional bank account."
However, Binance never received any response from the SEC. To our knowledge, no virtual asset service provider (VASP) has obtained a license under the new framework to date.
Nearly a year later, on June 9, 2023, the SEC issued a notice on its website, warning the Nigerian public to be aware of Binance exchange activities and instructing Binance to immediately cease soliciting Nigerian investors. The notice stated: "Binance Nigeria Limited is not registered or regulated by this Commission, and its operations in Nigeria are illegal… Through this notice, Binance Nigeria Limited is directed to immediately cease attracting Nigerian investors in any form."
The mention of "Binance Nigeria Limited" in the notice is incorrect. Binance Nigeria Limited is not related to Binance and is registered by a third party, possibly for arbitrage benefits when Binance builds local services in Nigeria. However, it is clear that the SEC is targeting Binance itself.
Realizing that the SEC was actually issuing this notice to the real Binance, Binance immediately suspended its solicitation activities in Nigeria, including paid advertising, search engine optimization, online and offline activities, and all communications to users. These restrictions are still in place.
In a letter we sent to the SEC at the time, we reiterated that Binance was "fully committed to working with the Commission and complying with relevant regulations," and requested a meeting with the SEC (note that Binance had requested a meeting before, but did not receive a response from the SEC).
As always, the SEC did not respond. We could only try to continue to interact constructively with the SEC and provided feedback on its revised rules on March 29, 2024.
In August 2023, we decided to engage with the digital asset industry in Nigeria. We began to support the Digital Currency Coalition (DCC), an industry association composed of local and foreign digital asset service providers in Nigeria, aimed at advancing regulatory discussions and improving cryptocurrency regulations.
In November 2023, we did something in Nigeria that we had done with law enforcement agencies around the world: Binance provided law enforcement training for the Nigerian Financial Intelligence Unit (NFIU) and the Economic and Financial Crimes Commission (EFCC). These efforts not only improved the efficiency of cryptocurrency-related crime fighting globally, but also became an important relationship-building tool for Tigran's team to work more closely with law enforcement agencies.
In early December 2023, Binance received a letter from the Chairman of the House Financial Crimes Committee, requesting our attendance at a public investigative hearing in less than two weeks.
2024
Finally, through informal channels, we reached an agreement with the committee to reschedule the hearing to January 10, 2024, to allow us sufficient time to prepare and dispatch a delegation of Binance staff who understand the relevant important issues.
Tigran Gambaryan and several other members of our team went to Nigeria to attend this meeting and other related meetings. On January 5, Binance staff met with the Nigerian Financial Intelligence Unit (NFIU) to discuss information sharing and ongoing capacity building. The consensus reached between the two parties was that the NFIU would share a memorandum of understanding (MoU) outlining proposed terms and conditions for sharing anti-money laundering-related information.
On January 8, Binance staff held a face-to-face meeting at the House of Representatives building in Abuja with three members of the House Financial Crimes Committee (HCFC) and a secretary, which was a scheduled private preliminary contact. The meeting was chaired by Peter Akpanke, Philip Agbese, and Peter Aniekwe, along with a secretary.
During the meeting, the committee emphasized the importance of the issues under discussion and their determination to prosecute Binance, including issuing arrest warrants for our team and CEO, and preventing our team from leaving the country. Although the situation is concerning, we understand that HCFC does not actually have the authority to issue arrest warrants.
The committee confirmed that a public hearing would be held on January 10, giving Binance the opportunity to publicly respond to any charges in the presence of the complainant, the media, and over 30 organizations.
Despite multiple requests, Binance has not received detailed information about the charges. Therefore, our staff inquired about the opportunity to submit a written response without a public hearing. There are several reasons for this, such as the sensitive nature of the information and the need for our staff to prepare a more comprehensive substantive response after reviewing the complete charges. At the end of the meeting, the chairman confirmed that they would consider this and respond through Binance's local lawyer.
However, when our staff left the venue, they were approached by unidentified individuals who suggested paying a fee to settle the charges. Later that day, our local lawyer - who had previously represented us - was summoned by a person claiming to be their agent on behalf of the committee, conveying the committee's conditions and instructing our lawyer to provide advice to us. The lawyer reported receiving a request to secretly pay a large amount of cryptocurrency within 48 hours to resolve the issues, and we needed to make a decision in the morning. Our team became increasingly concerned about their safety in Nigeria and immediately left. Of course, we rejected the payment request through the lawyer, as we did not consider it a legitimate settlement proposal, and clarified that we would only engage in settlement negotiations under the following conditions:
Binance needs to see detailed information about the appeal and/or all charges.
The settlement must originate from an official source, be documented in writing, and signed by all relevant parties.
The settlement must involve all relevant institutions and ensure a comprehensive resolution of all charges (if applicable, including any potential historical tax liability).
While the specific terms of the settlement may need to be kept confidential, there must be a public acknowledgment of reaching a resolution.
There should not be a public hearing before the committee's discussion.
Our contractors and employees should not be subjected to intimidation, harassment, or detention.
Our lawyer conveyed Binance's conditions, initially facing opposition. However, our lawyer informed us that the committee eventually agreed to the above conditions.
Shortly after returning from this trip, the NFIU shared a draft MoU, which outlined Binance's commitment to voluntarily submit suspicious activity reports (SARs) and suspicious transaction reports (STRs), provide training to law enforcement agencies in Nigeria and other regions, and a commitment to mutual cooperation. We see this as a positive development in our efforts to make cryptocurrency safer and free from criminal activities.
On February 5, a Binance advisor with close ties to the local community suggested a meeting with the Director of the Office of the National Security Adviser (ONSA). This director would become Binance's key contact in Nigeria. We saw this as another positive development, as it would allow us to communicate centrally through a very senior and respected figure in the Nigerian law enforcement community, rather than having to deal with multiple agencies/departments individually.
In early February, our team discussed the possibility of a meeting with ONSA and the Economic and Financial Crimes Commission (EFCC). In an email, we outlined the key role we play in global law enforcement work. We collaborate with law enforcement agencies around the world, conduct joint investigations, and provide support when necessary. In particular, we have established a solid and effective cooperation with the corresponding agencies in Nigeria (including the EFCC). The proposed meeting agenda included:
Introduction of Binance and our global operations and compliance procedures.
Binance's current cooperation with the EFCC and the Financial Intelligence Unit.
Overview of cooperation with the SEC, goodwill measures taken by Binance to comply with SEC directives, and assistance from ONSA in shaping future directions.
Recommendations for the meeting from HCFC and ONSA.
Strategies to enhance our cooperation with ONSA and strengthen bilateral relations.
The meeting was scheduled for February 26, 2024, at 2:00 PM at the ONSA office in Abuja. The meeting confirmed the attendance of the following government representatives: National Security Adviser, CEO of the SEC, and Deputy Governor of the Central Bank of Nigeria (CBN).
Despite the obvious risks, Tigran Gambaryan and Nadeem Anjarwalla (Binance's Africa head) received assurances of safe passage multiple times so that they could safely attend these meetings.
Concerns about the devaluation of the Naira and P2P services
During this period, the official currency of Nigeria, the Naira (NGN), experienced a sharp devaluation, with some observers calling the current situation the most severe financial crisis in generations. Although many cryptocurrency platforms have been operating in Nigeria and continue to do so, Binance has been the primary cryptocurrency platform in Nigeria at the time, and Nigerian traders have used Pionex's P2P products to hedge against currency devaluation. We began to notice concerns that the prices of merchants on the P2P platform were affecting the country's exchange rates.
Binance's P2P team engaged with the local community. We learned that due to the lack of official reference foreign exchange rates in Nigeria, Nigerians (whether using cryptocurrencies or not) are using the average prices in P2P advertisements as a reference for foreign exchange rates.
While the advertised prices in the P2P market are real-time and fluctuate with the market, they do not always reflect the actual trading prices. Binance does not set P2P prices; in fact, P2P transactions are entirely driven by individuals who can directly buy and sell specific cryptocurrency or fiat currency pairs. This is essentially a cryptocurrency market.
The usage, market depth, and liquidity of P2P products are not as strong as centralized exchanges. Due to lower liquidity and higher volatility, people in the P2P market may see peak prices in advertisements, which do not necessarily represent the actual asset prices, and these advertised prices do not necessarily translate into actual trades. Some members of the local community in Nigeria believe that these price fluctuations may be price manipulation, given that merchants widely use P2P advertisement prices as a reference for exchange rates, some people consider Binance to be one of the factors affecting the country's exchange rates and currency devaluation.
Of course, the factors influencing exchange rates are complex and primarily driven by macroeconomic policies.
Cato Institute: Nigeria’s Government Is Blaming Binance for Its Own Mismanagement
Applied Economics Professor Hanke: Nigerian Government's Crypto Claims Are 'Misguided and Incorrect'
Meanwhile, our P2P team continued to implement several measures, including removing advertisements with abnormal pricing, imposing restrictions on relevant users, and individually controlling trading limits. We also planned to add a "last traded price" display so that the market would no longer consider peak prices as market prices. The following are several blogs we published at the time, explicitly stating our commitment to providing users with a market-driven, non-fraudulent, and non-manipulative platform. We take the responsibility of protecting our users very seriously. To emphasize this, we explicitly stated that if a user's behavior is malicious or manipulative, they will be expelled from the platform.
What happened at that meeting?
On February 26, Tigran and Nadeem went to Nigeria for the scheduled meeting, as mentioned earlier, they received assurances of safety multiple times. In the first meeting, they met with ONSA, the President's office, the Central Bank, NFIU, EFCC, and SEC leaders.
The atmosphere of the meeting was neutral, neither friendly nor hostile. Overall, the meeting lasted for about two hours and made some progress.
In the past few months, one of the EFCC leaders who had been in contact with Tigran pulled them aside and assured them that everything was going smoothly, and Tigran and Nadeem had nothing to worry about. Later, Binance staff were informed that another meeting would be held shortly, this time involving ONSA, CBN, SEC, and the highest leadership of the Ministry of Communications, Innovation, and Digital Economy.
After waiting for over two hours, Binance staff were re-invited into the meeting room, but the attendees were different from the previously announced list - specifically, there were four EFCC members present.
In the second meeting, the leader of the opposing group presented a hostile attitude. He stated that the issues involving Binance had become a matter of national security and made the following demands:
Remove the Naira from the Binance platform (this was the first explicit request from Nigerian authorities to Binance);
Provide detailed information on all Nigerian users;
Provide financial/tax compliance information;
They further explained that until Binance met these demands, Tigran and Nadeem would be their "guests," placed in a "high-security" residence for "security reasons." Additionally, they demanded that Tigran and Nadeem surrender their passports.
After the meeting, Tigran and Nadeem were escorted back to the hotel, where they were asked to pack their belongings and move to a "secure residence" controlled by ONSA. Their phones were confiscated, and they were explicitly told not to leave. Tigran and Nadeem had no control over when and with whom they could communicate.
From that point on, Tigran, a U.S. citizen, and Nadeem, a British/Kenyan citizen, were detained. In the first few hours of their detention, the British High Commission and the U.S. Embassy were both informed of Tigran and Nadeem's situation.
The next day, Binance's legal counsel sent an email to the leaders of ONSA, requesting an "urgent clarification of the legal basis for detaining their employees," and pointing out that their respective embassies (U.S. and UK) had been notified. Our statement further emphasized: "We understand that, based on our conversation with you yesterday, your primary concern is the Naira as a tradable asset on the Binance platform, which is the first time we have been informed about the issue with the Naira, and we can remove the Naira from the Binance platform. However, we request that you ensure the immediate release of Tigran and Nadeem, and no restrictions be imposed on their actions, including leaving Nigeria."
That day, ONSA replied via email, stating that Tigran and Nadeem were their "guests" and were being "well taken care of."
We subsequently received confirmation that the U.S. and UK governments were aware of the situation and were closely monitoring it.
Within the next 24 hours, Tigran and Nadeem faced intense treatment, they were accused of personal responsibility for the Naira and the overall economic situation, and faced charges of terrorism financing and money laundering.
On February 28, we removed Naira trading pairs from our website and shut down P2P products targeting Nigeria on the Binance platform. We informed ONSA of our actions via email and requested immediate facilitation for Tigran and Nadeem to have "safe passage to the airport."
That day, we did not receive an official response from ONSA.
On the same day, the same EFCC leader who had been in contact with Tigran in the past few months broke down emotionally, apologizing to Tigran and stating that it was his fault, as he had assured Tigran and Nadeem that everything would be fine and the meeting was supposed to be friendly.
Shortly after, news of Tigran and Nadeem's detention was exposed in the global media. Nearly a month later, on March 23, we learned that Nadeem had left the illegal detention. Since then, Tigran's situation has gone from bad to worse.
What is the current situation like?
On April 25, at Tigran Gambaryan's bail hearing, the prosecutor from the Economic and Financial Crimes Commission (EFCC) told the court, "Since the first defendant (Binance) is virtual, the only person we can rely on is this defendant (Tigran)."
The Nigerian government's intent is very clear, they must detain an innocent employee who was a former federal employee in the United States, and imprison him in a dangerous prison to control Binance.
Since taking on the role of Binance CEO, I have been committed to collaborating with global regulatory agencies and law enforcement to protect the integrity of the global financial system.
Over the past two and a half years, Binance has worked to restructure our organization and personnel and upgrade our systems. We have brought in new leadership with rich compliance experience and outstanding backgrounds, coming from top traditional financial institutions, leading tech companies, law enforcement agencies, and major corporate entities.
Now, the Binance leadership team, including myself, reports to the board. The board, as the corporate regulator, is responsible for protecting the company's interests and making critical decisions to ensure the long-term sustainability and lifecycle of the business. It is through this process that we have become stronger, more secure, and more compliant, providing a safer platform for our users. Our business has undergone a transformation.
This ordeal has caused deep pain to Tigran, his family and friends, and the entire Binance community. As mentioned earlier, to dispel doubts about our role in the country's currency crisis, earlier this month I made the difficult decision to close Binance's P2P products targeting the Nigerian market and terminate all spot trading pairs with the Naira. We took this drastic measure in the hope that our colleagues would be released and Binance could continue to work with the Nigerian government to resolve outstanding issues. Unfortunately, this did not happen as expected.
We will continue to support Tigran with unwavering determination.
Let Tigran reunite with his family, and then Binance will, as it has done over 600 times before, voluntarily collaborate with Nigerian law enforcement agencies. We will always strive to protect innocent users and not allow bad actors on our platform. We will continue to work tirelessly with public and private partners to drive out bad actors. Additionally, we will continue to work with the Federal Inland Revenue Service of Nigeria to address any potential historical tax issues.
I still do not understand why Nigerian government officials are unwilling to accept this solution. The Nigerian government has extraordinary power to determine the future of Binance and the broader crypto industry within its jurisdiction. Binance wants to build a future where we work alongside the Nigerian government to build a strong economic body for the Nigerian people. But this crisis must be resolved quickly, and if we are to move forward, Tigran must be allowed to return home.
Binance remains committed to innovative approaches with digital assets and platforms, but we must also build a future where we are good actors in the international community, as we see ourselves.
I want to express my deepest gratitude for the support we have received from around the world during this crisis, and I hope that my next update will tell everyone that our employees have safely returned home and reunited with their families.
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