As you may know, one of our beloved colleagues, Tigran Gambaryan, remains in government detention in Nigeria for over 70 days. There is a lot of public commentary on this episode, and I wanted to take this opportunity to provide the facts so that the global community's perception is not unfairly distorted. I also feel it is time to speak out about this issue on behalf of the global business community. Inviting a company's mid-level employees to collaborative political meetings, only to detain them, has set a dangerous new precedent for all companies around the world.
I want to start by sharing a little about Tigran, a person I have come to know well and deeply admire since joining Binance. The greatest irony and most regrettable fact is that a highly valued global financial crime fighter, who is professionally recognized by his peers in the public and private sectors, has been detained in Nigeria for over two months for spurious reasons.
Tigran dedicated his professional life to combating financial crimes. Tigran's decade as a federal police officer was documented in a book called Tracers in the Dark: The Global Hunt for the Crime Lords of Cryptocurrency, and we launched this blog a few weeks ago to share more about his illustrious career fighting crime.
He joined Binance after working for the US IRS as a Special Agent to continue the work he started. He recognized that he could do even more by working for the largest company in this sector, to prevent bad actors from entering and maintain market integrity. Anyone who has left public service for a private organization can tell you that sometimes you can make an even greater positive impact by working for a private company that has extraordinary scale.
Against this background, Tigran was hired in 2021 to help Binance develop and build stronger compliance controls specific to cooperating with law enforcement and stopping financial crimes. As the leader of Binance's Financial Crimes Compliance (FCC) team, he has been a strong advocate for Binance to develop compliance policies and resources that set new standards in the industry. In 2022 and 2023, Tigran's Financial Crimes Compliance team assisted global law enforcement authorities in freezing and seizing more than $2.2 billion in assets, including more than $285 million in cooperation with U.S. agencies. such as the FBI, DOJ, DEA, among others.
Finally, it is important to note that Tigran did not come to Nigeria as a “decision maker” nor as a “negotiator”. He was merely acting as a functional expert on financial crimes and policy discussion training.
History of the situation in Nigeria
I think it is important to go back a few years to help provide a clearer picture of our activities in Nigeria. In fact, this story started almost two years ago.
2022-2023
In May 2022, Nigeria's Securities and Exchange Commission (SEC) published regulations for digital assets, bringing cryptocurrency under its purview. Regulations require cryptocurrency exchanges operating in Nigeria to obtain a license from the SEC and meet certain requirements. However, regulations fail to clarify some of the key licensing requirements (e.g. application process, licensing fees, etc.), making it virtually impossible to apply for a license.
Binance has proactively reached out to the SEC on several occasions to seek practical guidance on the licensing process and has offered to engage with Nigerian authorities on an advisory basis.
For example, in a letter dated June 22, 2022, Binance stated that it "would welcome and be grateful for the opportunity to collaborate with the SEC and other industry participants in the blockchain coalition in the coming days to provide further clarity on the application of the new rules, particularly around the interaction of these rules in relation to the position taken by the Central Bank of Nigeria, the fee structure for licensing and the impact of registration on the facilitation of bank accounts in the region.”
However, Binance never received any response from the SEC. To our knowledge, no Virtual Asset Service Provider (VASP) has been licensed under the new regulations to date.
Almost a year later, on June 9, 2023, the SEC published a circular on its website to warn the Nigerian public against the activities of the exchange Binance and instruct Binance to immediately stop soliciting Nigerian investors. The circular stated: "Binance Nigeria Limited is neither registered nor regulated by the Commission and its operations in Nigeria are therefore illegal… By this circular, Binance Nigeria Limited is directed to immediately stop soliciting Nigerian investors in any form."
The reference in the circular to ‘Binance Nigeria Limited’ was incorrect. Binance Nigeria Limited is not affiliated with Binance and was registered by a third party in violation of the Binance trademark and for arbitration purposes if Binance wished to establish a local presence in Nigeria. However, it became clear that the SEC's intention was to target the Binance exchange.
Recognizing that the intent was to deliver this notice on the authentic Binance exchange, Binance immediately suspended activities in Nigeria, including paid advertising, SEO, online and in-person events, as well as all communications directed to users. These restrictions are still in effect to date.
In the letter we sent to the SEC at that time, we reiterated that Binance was “fully committed to cooperating with the Commission and complying with relevant regulations” and requested a meeting with the SEC (noting that a previous meeting had been requested by Binance, but that no response had been received from the SEC).
Again, the SEC did not respond. We continue to engage constructively with the SEC, providing comments on its regulatory changes through March 29, 2024.
In August 2023, we decided to get involved through the Nigerian digital asset industry. We have started supporting the Digital Currency Coalition (DCC), an industry association comprising leading local and foreign digital asset service providers in Nigeria, promoting regulatory engagement and lobbying for the introduction of cryptocurrency regulation.
In November 2023, we did what we do with law enforcement organizations around the world: Binance conducted law enforcement training for the Nigerian Financial Intelligence Unit (NFIU) and the Anti-Crime Commission Economic and Financial Crimes Commission - EFCC). These efforts have not only helped improve efforts to combat cryptocurrency-related crime around the world, but also serve as a critical relationship-building tool for the Tigran team to work more closely with law enforcement.
In early December 2023, Binance received a letter from the Chairman of the House Committee on Financial Crimes (HCFC) requesting that we attend a public investigative hearing in less than two weeks.
2024
Ultimately, through informal channels, we were able to agree with the Committee that the hearing should be rescheduled for January 10, 2024, to provide a realistic timeline for preparing and sending a delegation of Binance employees with expertise on the issues that were important to discuss.
Tigran Gambaryan and several other members of our team traveled to Nigeria to participate in this and other meetings. On January 5, Binance officials met with the NFIU to discuss information sharing as well as ongoing capacity building. The agreed next step was for the FIU to share a Memorandum of Understanding (MoU) setting out the proposed terms and conditions for sharing information related to the prevention of money laundering (PLD).
On January 8, Binance officials held a face-to-face meeting with three members of the HCFC and a clerk in Abuja at the House of Representatives building to schedule a private pre-hearing. The meeting was chaired by Honorable Peter Akpanke, Honorable Philip Agbese and Honorable Peter Aniekwe as well as a scribe.
During the conversation, the Committee highlighted the important nature of the issues at hand and the extent to which they were prepared to call out Binance, including issuing arrest warrants against our team and CEO and preventing our team from leaving the country. Although worrying, it was understood that the HCFC does not, in fact, have the power to issue arrest warrants.
The Committee confirmed that the public hearing would continue on January 10th and that Binance would have the opportunity to publicly respond to any allegations in the presence of the petitioners, the press and more than 30 agencies.
Despite multiple requests, Binance had not yet received details of the allegations, and our officials therefore asked if there was an opportunity to submit our responses in writing and in the absence of a public hearing. There were a number of reasons for this, including the sensitivity of the information and the opportunity to see the allegations in full and prepare a full substantive response. The meeting ended with the President confirming that they would consider the matter and get back to Binance's local lawyer.
However, as our employees were leaving the premises, they were approached by unknown people who suggested that they make a payment to resolve the allegations. Later that day, our local lawyer—who represented us at the time—was summoned by the Committee through someone purporting to be their agent, who relayed the Committee's terms and instructed our local lawyer to advise us. The lawyer advised that he had received a demand for a significant amount in cryptocurrency to be paid in secret within 48 hours to make these problems go away and that our decision was due tomorrow. Our team became increasingly concerned about their safety in Nigeria and left immediately. We of course declined the demand for payment through our attorney, not seeing it as a legitimate settlement offer, and clarified that we would engage in settlement negotiations under the following conditions:
Binance needs to see the petition and/or details of all allegations.
Any agreement must be official, recorded in writing and signed by all relevant parties.
Any settlement must encompass all relevant bodies and be in full and final agreement with all allegations, including any potential historical tax liabilities, if applicable, with warranties.
While the exact terms of any agreement may have to remain private, there would have to be some public recognition that a resolution has been reached.
There shall be no public hearing before the Committee.
Our contractors and employees must not be intimidated, harassed or detained.
Our lawyer conveyed Binance's conditions, which were initially denied. However, we were informed by our lawyer that the Committee ultimately agreed to the above.
Shortly after returning from the trip, the NFIU shared the draft Memorandum of Understanding (MoU), which covers Binance's commitment to voluntarily file SARs/STRs, provide training to Nigerian and other regional law enforcement agencies, and to both parties cooperate with each other. We saw this as a positive development in the cooperative effort to make cryptocurrencies safer and free from criminal activity.
On February 5, a Binance advisor with deep local connections advised a meeting with the director of the Office of National Security Advisor (ONSA), which would become the central gateway for Binance to have its presence in Nigeria. Again, we saw this as a positive development because instead of dealing with multiple agencies/departments, we would be able to focus communications through a very senior and respected pillar of the Nigerian law enforcement community.
In early February, our team was communicating with ONSA and EFCC about opportunities for a meeting. In one of these emails, we explained the “critical role (we play) in global law enforcement efforts. We engage in partnerships with law enforcement agencies around the world, conducting joint investigations and offering support where necessary. In particular, we have established a strong and productive relationship with our counterparts in Nigeria, including the EFCC." Binance's proposed meeting agenda included the following items:
Introduction to Binance and our global operations and compliance program.
Binance's current cooperation with the EFCC and FIU.
Overview of engagement with the SEC, steps taken by Binance in good faith to comply with SEC guidelines, and future support for ONSA.
The petition before the HCFC and ONSA recommendations on engagement.
Strategy to improve our engagement and strengthen the relationship with ONSA.
The meeting was scheduled for February 26, 2024, at 2:00 pm, at the ONSA office in Abuja, Nigeria. It was confirmed that the following government representatives would be present: the National Security Advisor; the Chief Executive of the SEC; and the Deputy Governor of the Central Bank of Nigeria (CBN).
Despite the clear risks, Tigran Gambaryan and Nadeem Anjarwalla (Leader of Binance Africa) received multiple assurances that they would receive safe passage to their meetings.
Concerns about NGN pricing in P2P
At this time, the naira (NGN), the Nigerian currency, was in the midst of a sharp decline in what some observers called the worst financial crisis in a generation. While many cryptocurrency platforms operate in Nigeria — and continue to do so to this day — Binance was the main cryptocurrency platform operating in Nigeria at the time, and Nigerian traders were using the P2P product on the Binance platform to protect themselves against the currency decline. We started to hear concerns that NGN prices from merchant ads on P2P influenced the country's exchange rate.
The Binance P2P team has engaged with the local community. What we learned was that due to the lack of official reference FX prices in Nigeria, people in Nigeria, including cryptocurrency users and non-cryptocurrency users alike, were using P2P ad price averages as a source of FX rate reference.
Although the P2P market announcement price (quote price) is real-time and moves with the market, it is not always a reflection of the actual traded price. Binance has no role in setting P2P prices: in fact, P2P transactions are conducted by individuals seeking to engage in direct purchases and sales of specific cryptocurrency or fiat-to-crypto pairs. Essentially, it is a market for cryptocurrencies.
The P2P product does not have the same level of usage or the same market depth and liquidity as the centralized brokerage. Due to lower liquidity and higher volatility, people may see price spikes in the P2P market that do not necessarily represent real-world asset pricing, and the quotes do not even necessarily lead to a trade. Part of the local community in Nigeria saw these spikes as potential price manipulation, and given the widespread use of P2P ad prices by traders as an FX rate benchmark, some suggested that Binance was a factor in the FX rate volatility of the country and currency depreciations.
The reality, of course, is that the factors contributing to FX rates are complex and largely driven by macroeconomic policies. Here are some useful links on this topic:
At the same time, our P2P team continued to work on several initiatives, including removing abnormally priced ads, applying restrictions to relevant users, and separate controls for buy/sell limits. There were also intentions to add a feed of last traded prices so that price spikes would no longer be seen as market prices. Below are some blogs we launched at the time to make it clear that we are dedicated to providing a market-driven, fraud-free and manipulation-free platform. The fact is that we take our responsibility to protect users very seriously. To reinforce the point, we make it clear that if users are behaving in a malicious or manipulative manner, they will be removed from the platform.
The February 26 meetings
On February 26, Tigran and Nadeem traveled to Nigeria and attended the meetings they had scheduled and, as stated above, received several security assurances. In their first meeting, they met with leaders from ONSA, the Office of the President, the Central Bank, the NFIU, the EFCC and the SEC.
The tone of the meeting was neutral—neither friendly nor hostile—and it appeared that general progress was being made during the two hours or so that the meeting lasted.
One of the EFCC leaders, with whom Tigran had built a relationship over the past few months, took them aside and said that everything was progressing well and that Tigran and Nadeem did not need to worry. Binance employees were informed that a new meeting would take place shortly after, this time involving the most senior leaders from ONSA, CBN, SEC and the Ministry of Communications, Innovation and Digital Economy.
After waiting more than two hours, Binance employees were invited back to a meeting room, albeit with different participants than announced — specifically, there were four members of the EFCC.
The group leader took a hostile approach. He said the issues involving Binance were national security and made the following demands:
Withdraw naira from the Binance platform (this was the first time this request was explicitly made by the Nigerian authorities to Binance).
Provide granular level details on all users in Nigeria.
Provide financial/tax compliance information.
They further explained that until such time as Binance complied with these requests, Tigran and Nadeem would be their “guests” and would be moved for “security reasons” to a house in a high-security complex. Furthermore, they asked Tigran and Nadeem to hand over their passports.
After the meeting, Tigran and Nadeem were escorted to the hotel, asked to pack their belongings and taken to the secure compound, which was controlled by ONSA. Their cell phones were confiscated and it was clear to them that they were not free to leave. Nadeem and Tigran had no control over when and who they spoke to.
From this point onwards, Tigran (a US citizen) and Nadeem (a British-Kenyan national) were detained. Both the UK High Commission and the US Embassy were alerted during the early hours of Tigran and Nadeem's detention.
The next day, Binance's lawyer sent an email to ONSA leaders asking them to “urgently clarify the legal basis for the detention of [their] employees” and noting that the embassies of their respective countries (U.S. to Tigran and United Kingdom to Nadeem) had been notified. Our note further stated: “We understand from our employees after conversations with you yesterday that your main concern is the listing of the naira as a tradable asset on the Binance platform. This is the first time we have become aware of this concern regarding naira advertising on our platform. We can withdraw naira from the Binance platform. However, we urge you to ensure the immediate release of Tigran and Nadeem and that no restrictions be imposed on their movements, including their departure from Nigeria.”
On the same day, ONSA responded by email, stating that Tigran and Nadeem were their “guests” and treated with “hospitality”.
We also received confirmation that day that the US and UK governments had been informed of the situation and were monitoring it closely.
The next 24 hours were marked by aggressive behavior towards Tigran and Nadeem, where they were accused personally of being responsible for the state of the naira and the economy in general, in addition to allegations of terrorist financing and money laundering.
On February 28th, we removed naira pairs from our website and shut down the P2P product for Nigeria on the Binance platform. We informed ONSA of our actions in an email and requested that Tigran and Nadeem be immediately given "safe passage to the airport".
No official response from ONSA was received that day.
On this day, the same EFCC leader with whom Tigran had become close in recent months fell out emotionally with Tigran. He apologized and said it was his mistake as he had given Tigran and Nadeem his word that everything would be OK and the meeting should be amicable.
Soon after, the news of Tigran and Nadeem's arrest broke in the global media. Almost a month later, on March 23, we learned that Nadeem left detention illegally. From that point on, things went from bad to worse for Tigran.
Where are we today?
On April 25, during a bail hearing for Tigran Gambaryan, the EFCC prosecutor told the court: “The 1st defendant [Binance] is operating virtually. The only thing we have to hold on to is this defendant [Tigran].”
The message from the Nigerian government is clear: we must arrest an innocent mid-level employee and a former US federal agent, and put them in a dangerous prison to control Binance.
Since assuming the role of CEO of Binance, I have made a fundamental commitment to working with global regulators and enforcement agencies to maintain the integrity of the global financial system.
Over the past two and a half years, Binance has worked hard to restructure our organization and personnel and update our systems. We have new leadership in place with deep compliance experience and impressive track records, from major traditional financial institutions and leading technology companies, to law enforcement agencies and large corporate entities.
Today, the Binance leadership team, including myself, report to a Board of Directors. The Board is responsible, as a corporate administrator, for protecting the company's interests, as well as making important decisions to ensure the long-term sustainability and viability of the business. It is through this process that we become a stronger, safer and even more compatible and secure platform for our users. We have evolved dramatically as a company.
This serious situation has been deeply distressing for Tigran, his family and friends, as well as the entire Binance community. As mentioned above, to remove any doubt about the allegations that we played a role in the country's currency crisis and as a gesture of good faith, I made the difficult decision earlier this month to shut down our P2P product on the Binance platform for Nigeria and close trading of all naira pairs on the Spot broker on the Binance platform. Our hope when we took this drastic step was that our colleagues would be released and Binance could continue working with the Nigerian government to resolve any further concerns. Unfortunately, that didn't happen.
We continue to do anything and everything we can to support Tigran. This support is unwavering.
Let Tigran go home to his family and then Binance will go through the same process that we have done with the Nigerian law enforcement community voluntarily over 600 times in the past. We will always work to protect innocent users, and malicious people are not welcome on our platform. We will work tirelessly with public and private partners to remove them. Additionally, we will continue to engage with the Federal Revenue of Nigeria (FIRS) in resolving potential tax liabilities.
It is still unclear to me why this is not a solution that Nigerian government officials are willing to agree to. The Nigerian government has extraordinary power to determine the future of Binance and the broader cryptocurrency industry within its borders. Ultimately, Binance wants to have a future where we work alongside the Nigerian government to be part of building a strong economy for the Nigerian people. But this crisis must come to a quick resolution, and Tigran must be allowed to go home if we are to move forward.
Binance remains committed to taking an innovative approach to the use of digital assets and platforms, but must also build a future in which we are seen, as we see ourselves, as good actors in the international community.
I would like to express my deepest gratitude for the many messages of support we have received from around the world in response to this crisis, and I hope my next update is one in which our employees are safe at home with their families.
Richard Teng, CEO of Binance.