Is Nigeria Strong-Arming Binance?

In
late
February,
the
Nigerian
government
let
it
be
known
that
it
thought

$26
billion
had
illegally
moved
through
Binance
out
of
the
country
in
2023.
This
estimate
was
made
by
the
country’s
central
bank
governor,
who
said
the
nation
was
losing
out
on
taxes
from
unregistered
crypto
activity.

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A
few
days
later,
authorities
in
the
country
invited
two
Binance
executives
—
Tigran
Gambaryan,
who
runs
the
exchange’s
financial
crime
compliance,
and
Nadeem
Anjarwalla,
the
company’s
regional
manager
in
Africa
—
to
the
country
to
discuss
the
issue.
The
authorities
reportedly
demanded
that
they
name
Nigerians
trading
on
their
platform.

On

Feb.
26,
Gambaryan
and
Anjarwalla
were
taken
into
custody,
but

not
charged
with
any
crimes.
A
court
granted
Nigeria’s
Economic
and
Financial
Crimes
Commission’s
request
to
detain
the
two
executives
for
14
days,
and,
though
they
were
scheduled
to
appear
in
court
on
April
4,
the

BBC
reported
Gambaryan
and
Anjarwalla
continued
detention
was
“unlawful.”

The
two
were
reportedly
intercepted
by
national
security
officers
after
arriving
in
the
country
on
the
grounds
that
Binance
operates
illegally
in
Nigeria.
A
week
before,
the
country
moved
to
block
access
to
multiple
crypto
platforms
in
a
bid
to
strengthen
foreign-exchange
and
capital
controls
on
its
crashing
local
currency,
the
naira.

Nigeria
is
facing
a
scarcity
of
dollars
as
the
naira
has
fallen
around
70%
against
the
greenback
since
last
year.
Central
Bank
of
Nigeria
Governor
Olayemi
Cardoso
named
Binance
directly
during
a
press
conference
in
late
February,
when
he
announced
a
record
interest
rate
bump
to
stymie
the
naira’s
free
fall.

Whether
Binance
has
contributed
to
Nigeria’s
worsening
economic
picture
is
certainly
up
for
debate,
though,
to
the
extent
that
authorities
in
the
country
are
detaining
mid-level
executives,
it
seems
Nigeria
is
looking
to
strong-arm
the
exchange
and
scapegoat
its
financial
woes.

At
this
moment
in
time,
Binance
is
something
of
an
international
pariah.
The
world’s
largest
exchange
just
recently
agreed
to

pay
a
record
$4.3
billion
fine
to
the
U.S.
Department
of
Justice
for
“horrendous”
crimes,
including
facilitating
terrorist
financing
and
the
very
worst
things
you
can
do
online.

The
exchange
has
been

chased
out
of
countless
countries
across
the
globe,
and
its
founding
CEO,
the
face
of
Binance
for
years,
Changpeng
Zhao,
was
ordered
to
step
down
and
likely
faces
time
in
federal
prison.
In
other
words,
it’s
unlikely
that
many
international
courts
or
better
business
bureaus
would
care
if
the
exchange
lived
or
died
(this
is
made
worse
by
the
exchange
resisting
setting
up
a
headquarters
in
any
particular
county).

It’s
conceivable
then
that
Nigeria
sees
Binance
as
something
to
extort,
an
easy
mark
that
no
embassy
would
defend,
and
that
many
are
predisposed
to
believe
likely
did
facilitate
illicit
transfers
or
tax
evasion
in
the
country.
It’s
worth
noting
that,
although
the
Nigerian
government
moved
to
block
access
to
other
crypto
platforms,
seemingly
only
Binance
is
under
fire.

In
early
March,
Bayo
Onanuga,
an
adviser
to
the
Nigerian
president,
suggested
the
country
could
level
a

$10
billion
fine
against
Binance,
though
he
later
said
he
was
misquoted
and
that
nothing
was
“finalized”
yet.
On
Monday,
the
country
finally
got
around
to
charging
Binance
with
tax
evasion.

Nigeria’s
Federal
Inland
Revenue
Service
announced
on
Monday
that
Binance
faces
four
charges
of
alleged
non-payment
of
Value-Added
Tax
(VAT
or
sales
tax)
and
company
income
tax,
failure
to
submit
tax
returns
and
complicity
in
aiding
customers
to
evade
taxes
through
its
platform.

Gambaryan
and
Anjarwalla

(who
has
reportedly
escaped
custody)
were
identified
as
defendants
in
the
case
filed
at
the
Federal
High
Court
in
Abuja,
the
nation’s
capital,
the
tax
agency
said.
Reportedly,
in
their
initial
conversations,
Nigerian
authorities
expressed
two
primary
concerns
about
Binance:
that
it
cannot
trace
the
money
that
moves
through
the
exchange,
and
that
the
exchange
was
putting
pressure
on
the
naira
by
facilitating
trading
on
its
peer-to-peer
marketplace.

See
also:



Nigeria
Charges
Binance
With
Tax
Evasion
After
Detained
Exec
Escapes

Binance
halted
all
support
for
its

peer-to-peer
marketplace
in
Nigeria
earlier
in
March
due
to
the
pressure
from
the
country’s
government.
The
service
apparently

grew
in
popularity
in
2021
after
former
President
Muhammadu
Buharithe
banned
much
crypto
activity
in
the
country.
In

July
2023,
Nigeria’s
Securities
and
Exchange
Commission

issued
a
warning
about
Binance,
alleging
that
“any
investing
public
dealing
with
this
entity”
was
doing
so
at
a
“high
level
of
risk”
of
losing
their
fund.

However
it
isn’t
only
Binance
that
the
country
is
cracking
down
on.
Bloomberg
reported
that
the
“anti-graft”
officers
had
been
arresting
street
currency
traders
and
other
supposedly
unlicensed
forex
operators.
This
certainly
adds
context
to
Nigeria
having
asked
Binance
for

information
on
its
top
100
users
in
the
country
as
well
as
the
exchange’s
last
six
months
of
transaction
history.

Binance
said
around
the
time
Gambaryan
and
Anjarwalla
were
arrested
it
had

previously
cooperated
with
Nigerian
agencies,
responding
to
626
information
requests
from
law
enforcement
over
the
last
four
years.
A
team
even
engaged
in
the
anti-graft
agency’s
training
sessions
towards
the
end
of
last
year.

See
also:



Binance
Blocked
by
Philippines
Securities
Watchdog

Nigeria’s
economic
situation
could
certainly
have
been
exacerbated
by
crypto.
Bitcoin
and
stablecoins
see
above-average
levels
of
adoption
and
use
in
countries
facing
inflation
and
economic
turmoil
for
a
reason:
crypto
is
a
way
to
opt
out
of
a
bad
situation.
That
may
be
why,
in
December
2023,
the
Central
Bank
of
Nigeria
lifted
the
ban
for
banks
engaging
in
crypto
and

issued
regulatory
guidelines
for
virtual
asset
service
providers.
These
would
give
authorities
greater
control
over
and
insight
into
crypto
usage.

However,
many
economists
see
a
confluence
of
factors
pummeling
the
naira.
An
already
weak
economy
was
made
worse
after
President
Bola
Tinubu
relaxed
the
country’s
foreign
exchange
policies
and

cut
the
naira’s
peg
in
a
bid
to
attract
foreign
investment
and
diversify
the
oil-dependent
nation’s
economy.
Investment,
unfortunately,
has
been
slow
to
come
in
(in
fact,
many

foreign
companies
are
leaving
the
country),
and
the
naira
has
been
on
a
monthslong
decline.

It’s
a
bleak
story.
President
Tinubu,
who
took
office
in
May
2023,
has
vowed
to
support
local
businesses,
invest
in
infrastructure
and
tackle
the
problem
of
jihadi
terrorists
cutting
into
Nigeria’s
shipping.
That
crypto
is
also
a
national
priority
on
par
with
pirating
is
an
interesting
signal
for
the
entire
crypto
industry,
whether
legitimate
or
not.

Of
course,
Nigeria
might
do
well
to
welcome
the
crypto
industry
to
the
country,
which
will
help
jumpstart
a
financial
services
industry
and
contribute
to
the
national
coffers.
Notably,
after
Gambaryan
and
Anjarwalla’s
arrest,
a
Binance
spokesperson
said
that
Nigeria
was
“not
yet”
one
of
its
top
markets,
though
the
country,
with
a
population
of
more
than
200
million
people,
holds
“extraordinary
potential
and
we
hope
to
continue
to
invest
there.”

There
is
also
nothing
inherently
wrong
with
going
after
a
company
that
hasn’t
paid
its
taxes
or
is
operating
out-of-sight
of
financial
regulators.
But,
dear
lord,
take
aim
at
the
company,
not
middle-managers
and
executives

with
families.
Otherwise,
instead
of
cheering
on
a
legitimate
investigation,
the
world
might
hope
more
political
prisoners
escape.