How Binance angered Nigerian authorities and led to the detention of two executives

Author: Edward Robinson Source: DLNews Translation: Shan Ouba, Golden Finance

Timeline

• Binance and two senior executives have been charged with money laundering.

• Authorities said Binance's trading has seriously damaged Nigeria's currency, the naira.

• Crypto exchanges ignoring routine licensing compliance will backfire.

Binance executives Tigran Gambaryan and Nadeem Anjarwalla have been detained by Nigerian authorities for six weeks after arriving in Nigeria to discuss the operation of the cryptocurrency exchange.

While Anjarwalla, a British citizen, managed to escape detention and flee the African country on March 22, Gambaryan's situation has deteriorated.

On Monday, the US citizen and head of Binance’s financial crime compliance unit pleaded not guilty to money laundering charges and was remanded to jail to await trial. His bail hearing is scheduled for April 18.

In a statement to DL News, a Binance spokesperson called the allegations against Gambaryan “baseless.”

“It is simply outrageous that he should be held in a prison like the Kuje Correctional Center,” the spokesperson said. “We are extremely disappointed that Tigran Gambaryan, who has no decision-making power at the company, continues to be detained.”

Problematic model

It is rare for executives of global companies to be charged with financial crimes during discussions with government officials. Then again,Binance does not act like most international companies. The company has refused to obtain licenses in countries where it offers online services from the beginning, and now that model is backfiring.

Under co-founder Changpeng Zhao, Binance has consistently disregarded the anti-money laundering and know-your-customer rules that have been strictly followed in the financial world for decades.

In November, Binance pleaded guilty to violating U.S. banking laws by allowing criminals and terrorist organizations to use its cryptocurrency exchange, and agreed to pay $4.3 billion to settle the case.

New CEO Richard Teng has vowed to reverse the company's free-wheeling past. But as the crisis in Nigeria shows, he has a lot of work to do.

Here's a timeline of the crisis so far:

February 22: Nigeria's anti-corruption and security authorities have launched a wide-ranging investigation into Binance's alleged currency manipulation and illegal financial transactions on its platform. The country's telecommunications regulator also blocked users from accessing the cryptocurrency exchange's website.

February 28: Nigerian authorities detained Gambaryan and Nadeem Anjarwalla, Binance's country manager for Kenya, after talks broke down.

March 5: Binance removes naira settlements from its platform and withdraws all services in Nigeria, leaving the country’s estimated 13 million users scrambling for alternatives.

March 18: A Nigerian court orders Binance to disclose user data of millions of its customers to authorities.

March 22: Anjarwala evaded guards after performing ritual prayers at a mosque in Abuja and flew out of Nigeria using his Kenyan passport.

March 29: Nigeria’s anti-corruption agency, the Economic and Financial Crimes Commission, files money laundering and related charges against Binance, Gambaryan and Anjarwalla.

April 3: Binance breaks its long silence on the case, telling DL News Gambaryan it has “no decision-making power”and should not be detained by Nigerian authorities.

April 4: Gambayan appears in court but is unable to enter a plea after Nigerian officials made procedural errors.

April 5: Gambayan is moved to an underground cell run by the EEFC.

April 8: Gambaryan pleaded not guilty to five charges of money laundering and was remanded to a medium-security prison until a bail hearing on April 19.