By Ahmad Muhammad Danyaro
Recent headlines have painted a picture of two Binance executives – Nadeem Anjarwalla and Tigran Gambaryan – being “unjustly” detained in Nigeria.
While their situation maybe concerning, a closer look reveals a more complex story, one where Nigeria is exercising its legal right to investigate potential financial crimes and links to terrorism financing.
Nigeria faces significant economic challenges, including high inflation and a weakening naira. This has driven many Nigerians to cryptocurrencies as a hedge against a volatile traditional currency.
This widespread adoption of crypto, however, has raised concerns among economic and security experts as well as the Nigerian government itself.
The Nigerian government accuses Binance, the world’s largest crypto exchange, of playing a role in the naira’s depreciation. While Binance claims it merely facilitates peer-to-peer trading and doesn’t set prices, it emerged as a preferred platform for Nigerians seeking dollar-pegged stablecoins, essentially creating an unofficial black market for currency exchange. It also served as the go-to place for speculators and other users who want to determine the exchange rate.
This current focus on potential financial crimes goes beyond the detention of the executives.
The Nigerian Federal High Court recently ordered Binance to provide comprehensive data on its Nigerian users to the Economic and Financial Crimes Commission (EFCC). This move suggests the EFCC suspects money laundering or terrorist financing activities on the platform, possibly linked to the alleged manipulation of the naira.
Although formal charges have not yet been announced, the executives may be accused of currency manipulation, tax evasion, and operating without the necessary approvals. Additionally, some indications suggest potential charges such as:
• Market Manipulation: If Binance is found to have played a role in artificially inflating demand for cryptocurrencies, leading to the devaluation of the naira, charges related to market manipulation could be brought against the executives.
• Money Laundering: The EFCC’s investigation may uncover evidence of illicit activities using Binance’s platform. If the executives are found to be aware of or complicit in such activities, they could face money laundering charges.
Money laundering in Nigeria is a serious criminal offence under the Money Laundering (Prohibition) Act, which criminalizes various malpractices and imposes significant penalties, including imprisonment, fines, and asset forfeiture. The Act covers concealment, disguise, conversion, or transfer of funds derived from criminal activities, with tax evasion and currency exchange violations considered as predicate offences.
Nigeria’s money laundering laws have extraterritorial reach, applying to individuals and entities outside the country, with maximum penalties for individuals including imprisonment and fines, and penalties for legal entities including prosecution of officers and asset forfeiture. There is no statute of limitations for money laundering crimes, highlighting the country’s commitment to combatting the issue.
While the detainment methods and lack of clear communication with the families of the detained are concerning, it’s important to acknowledge that Nigeria is following its legal procedures. The executives were granted a court hearing, and consular visits have taken place, albeit with limitations.
The detention is not an arbitrary action but a response to alleged activities that may contravene Nigerian laws and the investigation is a testament to Nigeria’s commitment to enforcing its regulations and ensuring that all entities operating within its borders comply with its laws.
Nigeria’s legal framework is designed to safeguard its financial system and its citizens from potential risks associated with unregulated financial activities. The country’s stance on cryptocurrency has been clear: the Central Bank of Nigeria (CBN) does not recognize cryptocurrencies as legal tender and commercial banks have been prohibited from engaging in cryptocurrency transactions since 2017. The Securities and Exchange Commission (SEC) of Nigeria has also declared Binance’s operations illegal, as the company is not registered or regulated by them. This position aligns with the efforts of many countries to mitigate the risks associated with cryptocurrencies, such as money laundering and terrorism financing.
The narrative of sympathy towards Binance and the detained executives must be balanced with the recognition of Nigeria’s legal prerogatives and its strategic national interest. The country is acting within its rights to investigate and regulate entities that engage in financial activities within its jurisdiction. As the situation unfolds, it is imperative to respect the due process of law and allow the Nigerian authorities to carry out their duties in safeguarding the nation’s economic interests.
The situation is not a simple case of corporate bullying. Nigeria has legitimate concerns about the potential impact of cryptocurrencies on its economy and it has every right to curtail that. Only a thorough investigation and a fair trial can resolve the case not blackmail as some of the actors are trying to push.
Danyaro wrote in from Abuja