Binance CEO's Long Article: The Ins and Outs of the "Executives Detained" Incident
The devaluation of the naira and the economic crisis... have all been attributed to Binance by Nigeria.Original Author: Richard Teng
Original Compilation: Azuma, Odaily Planet Daily
As you know, one of our colleagues, Tigran Gambaryan, has been detained by Nigerian authorities for over 70 days. This has sparked a lot of public commentary, and I would like to take this opportunity to clarify some facts to prevent an unfair distortion of public perception regarding this matter. Additionally, I believe it is necessary to express some opinions on behalf of a global business organization—inviting employees from a company under the pretext of assisting in policy formulation, only to detain them, sets a dangerous precedent for all global companies.
First, I would like to introduce Tigran. Since I joined Binance, I have come to know Tigran better and have increasingly admired him. However, it is both ironic and unfortunate that this highly regarded global financial crime fighter, praised in both the private and public sectors, has been detained in Nigeria for over two months for some tenuous reasons.
Tigran has dedicated his entire career to combating financial crime. His ten years of service with the Federal Police have been documented in the book "Chasing Shadows: A Global Pursuit of Cryptocurrency Crime Leaders," and we published a blog a few weeks ago further highlighting his outstanding achievements in crime fighting.
After leaving his position as a special agent with the IRS, Tigran joined Binance to continue his work. Tigran realized that working for one of the largest companies in the emerging cryptocurrency industry would allow him to more effectively combat bad actors and maintain the healthy functioning of the market. Anyone who has transitioned from the public service sector to the private sector can tell you that sometimes working in a large private company can have a greater positive impact.
Against this backdrop, Tigran was hired by Binance in 2021 to help us establish and strengthen law enforcement cooperation and compliance matters to prevent financial crime. As the head of Binance's financial crime compliance team, Tigran has been a staunch advocate for policy formulation and compliance at Binance, 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 agencies such as the FBI, the Department of Justice, and the Drug Enforcement Administration.
It is also worth noting that Tigran did not go to Nigeria as a "decision-maker" or "negotiator"; he simply participated in discussions as an expert in financial crime and policy formulation.
Local Regulatory Context in Nigeria
I believe revisiting some stories will help reconstruct the history of our activities in Nigeria. In fact, this story began nearly two years ago.
2022-2023
In May 2022, the Nigerian Securities and Exchange Commission (hereinafter referred to as SEC) issued regulatory guidelines for digital assets, bringing cryptocurrencies under its regulatory purview. The regulations required cryptocurrency exchanges operating in Nigeria to obtain SEC approval 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 reached out to the SEC multiple times seeking practical guidance on the licensing process and proposed consultative discussions 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 applicability of the new rules in the coming days, particularly the Central Bank of Nigeria's stance on these rules, the fee structure for registration, and the impact of registration on facilitating regional bank accounts."
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 regulatory framework to date.
Nearly a year later, on June 9, 2023, the SEC published a notice on its website warning the Nigerian public to be cautious of Binance's activities and instructed Binance to immediately cease soliciting Nigerian investors. The notice stated: "Binance Nigeria Limited is not registered or regulated by this commission, and therefore its operations in Nigeria are illegal… By this notice, Binance Nigeria Limited is hereby instructed to immediately cease soliciting Nigerian investors in any form."
The mention of "Binance Nigeria Limited" is incorrect. Binance Nigeria Limited has no relation to Binance and is registered by a third party, possibly to profit while Binance builds local services in Nigeria. However, it is clear that the SEC was 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 events, and all communications directed at users. These restrictions are still in effect today.
In the letter we sent to the SEC at that time, we reiterated that Binance "is fully committed to cooperating with the commission and complying with relevant regulations" and requested a meeting with the SEC (note that Binance had previously requested a meeting but received no response from the SEC).
As always, the SEC did not respond. We could only attempt to maintain constructive interaction with the SEC and provided feedback on its revised rules on March 29, 2024.
In August 2023, we decided to engage through Nigeria's digital asset industry. We began supporting 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 some of the things we had done globally in cooperation with law enforcement: Binance provided law enforcement training for Nigeria's Financial Intelligence Unit (NFIU) and the Economic and Financial Crimes Commission (EFCC). These efforts not only enhanced 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.
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
Ultimately, through informal channels, we reached an agreement with the committee to reschedule the hearing to January 10, 2024, to allow us ample time to prepare and send a delegation of Binance employees who understood the relevant key issues.
Tigran Gambaryan and several other members of our team traveled to Nigeria for this meeting and related discussions. On January 5, Binance employees met with the NFIU to discuss information sharing and ongoing capacity building. The consensus reached in the discussions was that the next step would be for the NFIU to share a memorandum of understanding (MoU) outlining proposed terms and conditions for sharing anti-money laundering-related information.
On January 8, Binance employees had a face-to-face meeting in the House of Representatives building in Abuja with three members of the House Financial Crimes Committee (HCFC) and a clerk, which was a scheduled private preliminary engagement. The meeting was chaired by Peter Akpanke, Philip Agbese, and Peter Aniekwe, along with a clerk.
During the discussions, the committee emphasized the importance of the issues being discussed and their determination to prosecute Binance, including issuing arrest warrants for our team and CEO, and preventing our team from leaving the country. While the situation was concerning, we understood that the HCFC did not actually have the authority to issue arrest warrants.
The committee confirmed that the public hearing would take place on January 10, and Binance would have the opportunity to publicly respond to any allegations in the presence of complainants, the media, and over 30 agencies.
Despite multiple requests, Binance still had not received detailed information regarding the allegations, so our employees inquired whether there was an opportunity to submit a written response without a public hearing. There were many reasons for this, such as the potential sensitivity of the information and that our employees could prepare a more substantive response after reviewing the full allegations. At the end of the meeting, the chairman confirmed they would consider this matter and respond through Binance's local lawyer.
However, as our employees were leaving the meeting, they were approached by some unidentified individuals who suggested they pay a fee to resolve the allegations. Later that day, our local lawyer—who had represented us at the time—was summoned by the committee through a person claiming to be their agent, who conveyed the committee's conditions and guided our lawyer on how to advise us. The lawyer reported that he received a request for a large amount of cryptocurrency to be paid secretly within 48 hours to resolve these issues, and we needed to make a decision by the morning. Our team became increasingly concerned about their safety in Nigeria and left immediately. Of course, we rejected the payment request through our lawyer, as we did not believe it was a legitimate settlement proposal, and clarified that we would only engage in settlement negotiations under the following conditions:
Binance needs to see the relevant complaints and/or detailed information on all allegations;
The settlement must originate from an official source, be documented in writing, and signed by all relevant parties;
The settlement must involve all relevant agencies and ensure comprehensive resolution of all allegations (including any potential historical tax liabilities, if applicable).
While the specific terms of the settlement may need to be confidential, there must be some public acknowledgment of the resolution.
There should not be a public hearing before the committee discussion;
Our contractors and employees should not be intimidated, harassed, or detained.
Our lawyer conveyed Binance's conditions, which were initially met with opposition. However, our lawyer informed us that the committee ultimately agreed to the above conditions.
Shortly after this trip, the NFIU shared a draft MoU, which summarized Binance's commitment to voluntarily submit suspicious activity reports (SARs) and suspicious transaction reports (STRs), provide training for law enforcement agencies in Nigeria and other regions, and the commitment for mutual cooperation. We viewed this as a positive development in our efforts to make cryptocurrency safer and free from criminal activity.
On February 5, a Binance advisor with close local connections suggested we meet with the Director of the Office of the National Security Adviser (ONSA). This director would become Binance's key contact in Nigeria. We again viewed this as a positive development, as it would allow us to communicate centrally through a very senior and respected figure in Nigeria's law enforcement community rather than dealing 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 our key role in global law enforcement efforts. We collaborate with law enforcement agencies worldwide to conduct investigations and provide support when necessary. In particular, we have established a solid and productive partnership with the corresponding agencies in Nigeria, including the EFCC. The proposed meeting agenda included:
Introduction to Binance and our global operations and compliance procedures.
Current cooperation between Binance and the EFCC and the Financial Intelligence Unit.
Overview of cooperation with the SEC, the good faith measures Binance has taken to comply with SEC directives, and ONSA's assistance in shaping future directions.
Suggestions from the HCFC and ONSA regarding the meeting.
Strategies to enhance our cooperation with ONSA and strengthen our relationship.
The meeting was scheduled for February 26, 2024, at 2 PM at the ONSA office in Abuja. The meeting confirmed that the following government representatives would be present: the National Security Adviser, the SEC CEO, and the Deputy Governor of the Central Bank of Nigeria (CBN).
Despite the obvious risks, Tigran Gambaryan and Nadeem Anjarwalla (Binance's head of Africa) received multiple assurances of safe passage to attend these meetings.
Concerns about the Naira's Devaluation and P2P Services
During this period, Nigeria's official currency, the Naira (NGN), experienced a sharp devaluation, with some observers calling the current situation the worst financial crisis in generations. Although many cryptocurrency platforms have operated in Nigeria and continue to do so, Binance has remained the primary cryptocurrency platform in the region, with Nigerian traders using Binance's P2P products to hedge against currency devaluation. We began to notice concerns that prices on the P2P platform were affecting the country's foreign exchange rates.
Binance's P2P team engaged with the local community. We learned that due to the lack of official reference foreign exchange prices in Nigeria, the Nigerian people (whether or not they use cryptocurrency) are using the average prices in P2P advertisements as a reference for foreign exchange rates.
While P2P market advertisements are real-time and fluctuate with the market, they do not always reflect the actual trading prices. Binance does not participate in setting P2P prices; in fact, P2P trading is entirely driven by individuals who can buy and sell specific cryptocurrency or fiat currency pairs directly. This is essentially a cryptocurrency market.
The usage, market depth, and liquidity of P2P products are not on par with centralized exchanges. Due to lower liquidity and higher volatility, people may see price spikes in the P2P market that do not necessarily represent the actual asset prices, and the quotes may not translate into actual trades. Some individuals in the local Nigerian community believe these price fluctuations may be price manipulation, and given that merchants widely use P2P advertisement prices as a reference for foreign exchange rates, some believe Binance is one of the factors contributing to the fluctuations in the country's foreign exchange rates and currency devaluation.
Of course, the factors influencing foreign 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 push several measures, including removing advertisements with abnormal pricing, imposing restrictions on relevant users, and individually controlling buy and sell limits. We also planned to add a "last transaction price" display to prevent the market from viewing price spikes as market prices. Here are several blogs we published at the time, clearly stating our commitment to providing users with a market-driven, fraud-free, and manipulation-free platform. We take our responsibility to protect users very seriously. To emphasize this, we made it clear that if users' actions are malicious or manipulative in nature, they would be expelled from the platform.
What Happened at the Meeting?
On February 26, Tigran and Nadeem traveled to Nigeria to attend the scheduled meeting, as previously mentioned, and they received multiple assurances of safety. In the first meeting, they met with leaders from ONSA, the President's Office, the Central Bank, NFIU, EFCC, and SEC.
The atmosphere of the meeting was neutral, neither friendly nor hostile. Overall, the meeting lasted about two hours and made some progress.
In the past few months, one of the EFCC leaders who had established contact with Tigran pulled them aside and told them that everything was going smoothly, and Tigran and Nadeem need not worry. They were then informed that another meeting would be held soon, this time involving the top leaders of ONSA, CBN, SEC, and the Ministry of Communications, Innovation, and Digital Economy.
After waiting for more than two hours, Binance employees were invited back into the meeting room, but the attendees were different from the previously announced list—specifically, four EFCC members were present.
In the second meeting, the opposing group's leader 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 time Nigerian authorities explicitly made this request 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 their hotel, where they were instructed to pack their belongings and be transferred to a "secure residence" controlled by ONSA. Their phones were confiscated, and they were explicitly told not to leave. Tigran and Nadeem lost control over when and with whom they could communicate.
From this point on, Tigran, a U.S. citizen, and Nadeem, a British/Kenyan citizen, were detained. In the first few hours of their detention, both the British High Commission and the U.S. Embassy were informed of Tigran and Nadeem's situation.
The next day, Binance's legal counsel emailed the leaders of ONSA, requesting them to "urgently clarify the legal basis for detaining their employees," noting that their respective embassies (the U.S. and the U.K.) had been notified. Our statement further indicated: "We understand that based on yesterday's conversation with you, 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 Naira issue, and we can remove the Naira from the Binance platform. However, we request your assurance that Tigran and Nadeem will be released immediately and that no restrictions will be placed on their actions, including leaving Nigeria."
That day, ONSA replied via email stating that Tigran and Nadeem were their "guests" and were being "warmly hosted."
We subsequently received confirmation that the U.S. and U.K. governments were aware of the situation and were closely monitoring it.
In the next 24 hours, Tigran and Nadeem faced intense treatment, being accused of personal responsibility for the Naira and the overall economic situation, and facing charges of terrorism financing and money laundering.
On February 28, we removed Naira trading pairs from our website and shut down Binance's P2P products targeting Nigeria. We emailed ONSA to inform them of our actions and requested immediate "safe passage to the airport" for Tigran and Nadeem.
That day, we did not receive an official response from ONSA.
On that day, the same EFCC leader who had established contact with Tigran in previous months broke down emotionally, apologizing to Tigran, saying it was his fault for having assured Tigran and Nadeem that everything would be fine, and that the meeting should have been friendly.
Soon after, news of Tigran and Nadeem's detention broke in the global media. Nearly a month later, on March 23, we learned that Nadeem had left the illegal detention. After that, Tigran's situation worsened.
What is the Current Situation?
On April 25, at Tigran Gambaryan's bail hearing, the prosecutor from the Economic and Financial Crimes Commission (EFCC) stated in court: "Since the first defendant (Binance) is virtually operated, the only one we can rely on is this defendant (Tigran)."
The Nigerian government's intent is very clear; they must detain an innocent employee who was once a U.S. federal worker and lock him in a dangerous prison to control Binance.
Since I took on the role of CEO of Binance, I have been committed to working with global regulators and law enforcement to protect the integrity of the global financial system.
Over the past two and a half years, Binance has worked to adjust its organizational structure and personnel and upgrade our systems. We have brought in new leadership with extensive compliance experience and outstanding backgrounds from top traditional financial institutions, leading tech companies, law enforcement agencies, and major corporate entities.
Today, the Binance leadership team, including myself, reports to the board of directors. The board serves as the corporate regulator, responsible for protecting the company's interests and making key decisions to ensure the long-term sustainability and lifecycle of the business. We are becoming stronger, safer, and more compliant through this process, providing users with a more secure platform. Our business has undergone a tremendous transformation.
This ordeal has caused deep suffering for Tigran and his family and friends, as well as for the entire Binance community. As previously mentioned, to eliminate doubts about our role in the country's currency crisis, I made the difficult decision earlier this month to shut down Binance's P2P products targeting the Nigerian market and terminate all spot trading pairs with the Naira. We took this radical step in hopes that our colleagues would be released while Binance could continue to work with the Nigerian government to resolve unresolved issues. Unfortunately, this has not happened as expected.
We will continue to support Tigran tirelessly, and this support is unwavering.
Let Tigran come home to reunite, and then Binance will voluntarily cooperate with Nigerian law enforcement agencies as we have done over 600 times before. We will always strive to protect innocent users and not allow bad actors on our platform. We will relentlessly work with public and private partners to drive out bad actors. Additionally, we will continue to work with the Nigerian Federal Inland Revenue Service to address any potential historical tax issues.
I still do not understand why Nigerian government officials are unwilling to accept this resolution. The Nigerian government has extraordinary power to play a decisive role in the future of Binance and the broader cryptocurrency industry under its jurisdiction. Binance hopes to build a future in partnership with the Nigerian government to create a strong economy for the Nigerian people. But this crisis must be resolved as soon as possible; if we are to move forward, Tigran must be allowed to come home.
Binance remains committed to leveraging innovative approaches to digital assets and platforms, but we must also build a future in which we are seen as good actors in the international community.
I would like to express my deepest gratitude for the many supports we have received globally during this crisis and hope that my next update will inform everyone that our employees have safely returned home to reunite with their families.
