The detention of two Binance executives by Nigerian authorities, following their meetings with government officials, highlights a concerning state of affairs within the government. The circumstances surrounding their detention have raised concerns regarding due process and the use of cryptocurrencies within Nigeria.
The Naira Crisis
The Naira, Nigeria’s national currency, is currently experiencing one of its worst crises in its history. The currency has lost around 70% of its value within just the past year, according to CNBC.
In recent years, the Nigerian government has implemented a series of economic reforms that have had a significant impact on the value of the Naira.
One of such measures was removing the currency peg to the US dollar, in favor of allowing the currency to flow freely. For many years, the Naira had been pegged to the US dollar at 197 Naira to one US dollar, according to the Brookings Institution. Following the abandoning of the peg to the dollar, the Naira began to rapidly lose its value compared to the dollar, at the time of writing this article, it stands at 1327 Naira to one US dollar.
The effects of the rapid devaluation of the Naira had devastating consequences for Nigerians. To make matters worse, following the inauguration of President Bola Tinubu, he announced the removal of the decades-long fuel subsidy policy, which aided in reducing the costs of goods for Nigerian consumers.
The Spread of Cryptocurrencies in Nigeria
As a result of the rapidly deteriorating economic conditions, more and more Nigerians have been looking to store their wealth in alternative assets to hedge against the currency’s loss of value.
Cryptocurrencies have, as a result, become an extremely popular avenue for Nigerians to store their wealth against the struggling Naira. Consequently, Nigeria has been the fastest-growing market for bitcoin adoption, according to Coindesk. Binance, the world’s largest cryptocurrency exchange, has been able to capitalize on this trend within Nigeria and managed to build a large base of customers among Nigerians looking to obtain cryptocurrency.
The Nigerian government has over the years taken issue with the adoption of cryptocurrency within Nigeria by Nigerians. In February 2021, the Central Bank of Nigeria placed a ban on banks and financial institutions from dealing in or facilitating transactions in crypto assets. Their reasoning behind the ban cited by the government was potential money laundering and terrorism financing risks, according to Reuters. That ban had been lifted by the Central Bank of Nigeria in December of 2023. In July of 2023, Nigeria’s Securities and Exchange Commission took issue with Binance directly, warning the public against dealing with the cryptocurrency exchange, stating that “any investing public dealing with this entity” was doing so at a “high level of risk” that “may result in the total loss of investments” according to Coindesk.
Binance Executives
With the economic crisis in Nigeria quickly spiraling out of control, the Nigerian government became increasingly frustrated with cryptocurrency exchanges. The Nigerian government began to place the blame for the economic hardships faced by the country on cryptocurrency exchanges, especially on Binance, one of the most commonly used exchanges in Nigeria.
The government’s main qualms with the cryptocurrency exchange are the lack of transparency on where the money that is exchanged goes and the speculation of the price of the Naira on Binance through its peer-to-peer marketplace, according to CNBC. In addition to that, the government alleges that Binance is involved in money laundering within the country.
Binance sought to ease the concerns of the Nigerian government to preserve its position in the country. As part of their attempt to ease the concerns, they shut down its peer-to-peer trading platform in Nigeria. Moreover, in February, two Binance executives had been sent to Nigeria to discuss with government officials about all the concerns they may have.
The two Binance executives, U.S. citizen Tigran Gambaryan and British-Kenyan citizen Nadeem Anjarwalla, had arrived in Nigeria in February and had been held as guests of the Nigerian government. However, after a series of meetings with government officials, they were both held in custody by Nigerian authorities on the 26th of February. Despite neither of them being charged with any crime at the time.
Concerns over Due Process
The detention of the two executives, despite not initially being charged with any crimes, raised concerns over due process. It also raised concerns over whether the executives had been lured into the country under false pretenses by the government, in order for them to be arrested upon arrival in the country.
Later on, both executives were charged alongside the company earlier this month with four counts of tax evasion by Nigerian authorities, according to Coindesk.
In separate court filings at the Federal High Court in Abuja, the two Binanace executives demanded the Nigerian government to release them from custody, return their passports and issue them a public apology.
The families of both men expressed their concern over their detention. The wife of Nadeem Anjarwalla argued that he has no authority to make high-level decisions at Binance and called on the Nigerian government to release him. Tigran Gambaryan’s wife also echoed similar concerns and stated that “the longer that our husbands are away from our families, the harder it is becoming for us to go about our daily lives.”
Escape from Detention
In another twist in this saga, it was revealed that one of the Binance executives, Nadeem Anjarwalla, managed to escape from custody and leave the country.
It was reported that he managed to escape after being taken to a mosque for prayers; however, many speculate online that he more likely may have paid a bribe to the security services for his release.
A Binance spokesperson acknowledged the reports of the escape to CNBC, stating that: “We were made aware that Nadeem is no longer in Nigerian custody. Our primary focus remains on the safety of our employees and we are working collaboratively with Nigerian authorities to quickly resolve this issue.”
In conclusion, this saga definitely paints a grim picture for the exchange of cryptocurrencies with Nigeria. However, despite the government’s attempts to crackdown on cryptocurrency exchanges, the current disastrous economic situation will always make people seek out alternative ways of preserving their wealth, and cryptocurrency is a easy method of doing so. Moreover, it’s yet to be seen, the repetitional hit Nigeria may face as a result of this saga, the consequences of which we will likely see in the coming months and years.
