The recent detention of Tigran Gambaryan, a head of Binance’s Financial Crimes Compliance team in Nigeria, has cast a long shadow over the country’s relationship with cryptocurrency, rule of law, and foreign businesses in general. Mr Gambaryan, a citizen of the United States of America, heading financial crime compliance for the world’s largest crypto exchange, was apprehended in February 2024 alongside his colleague Nadeem Anjarwalla, the Africa regional manager, who reportedly escaped custody. This incident starkly contrasts the recent treatment of TikTok’s CEO in the US, highlighting potential inconsistencies in how different governments treat foreign businesses.
The Nigerian government accused Binance of money laundering and tax evasion, charges the company vehemently denies. This crackdown coincides with a broader unease towards cryptocurrencies in Nigeria. Authorities have accused the company of facilitating “terrorism” financing, though public evidence remains elusive. However, Binance claims that Mr Gambaryan, who is not part of the company management, has previously worked with Nigerian law enforcement agencies, providing information that helped tackle fraud and money laundering activities up to $400,000. Binance’s CEO, Richard Teng, disclosed that Binance leadership initially began discussions with Nigerian officials in January 2024, followed by a subsequent meeting on February 26. During this encounter, Nigerian authorities categorised the issues concerning Binance as matters of national security.
In March, the Federal Inland Revenue Service (FIRS) initiated legal proceedings against Binance, alleging the company’s involvement in tax evasion. The FIRS identified four instances of non-compliance, including failure to remit value-added tax (VAT) and company income tax (CIT) and neglecting tax return filing obligations. Binance is also accused of enabling tax evasion among its users. The lawsuit further asserts that Binance neglected to register with the FIRS for tax purposes and contravened national tax regulations. The Federal High Court has postponed the proceedings concerning Binance and its executives to May 17, 2024.
The legal proceedings against Binance prompt significant legal inquiries, particularly regarding the involvement of Binance Nigeria Limited, the registered subsidiary in Nigeria, which is not implicated in the ongoing lawsuit, and the validity or legality of the charges against Binance International. This raises complex jurisdictional and corporate governance issues requiring careful examination and consideration. Additionally, Mr Gambaryan’s detention does not align with the penalties set out in the relevant laws under which he was charged. Section 15(4) of the Money Laundering (Prohibition) Act 2011 (amended) proffers the revocation or withdrawal of licences or fines when a corporate body commits acts of money laundering and has no jail term. This further questions the legality of Mr Gambaryan’s continued detention.
Meanwhile, concerns about TikTok, a Chinese-owned social media platform, focus on potential national security risks in the US. However, the US approach has been far more measured. While security officials have expressed concerns, they have opted for dialogue and legal procedures with TikTok executives, including CEO Shou Zi Chew. Mr Chew, a Singaporean citizen, has faced no travel restrictions or detention. This difference in approach raises questions about Nigeria’s commitment to due process and transparency.
The continued detention of the Binance executive without bail may affect foreign investment in Nigeria’s growing tech sector. Businesses thrive on a predictable legal environment and the perception that dialogue can resolve disputes. Mr Gambaryan’s situation creates uncertainty and could deter other international companies from entering the Nigerian market. The economic consequences of this approach could be significant. Nigeria boasts a young and tech-savvy population, making it a potentially lucrative market for innovative companies. However, Nigeria risks missing out on valuable investments that could create jobs and drive economic growth by appearing hostile to foreign tech businesses.
Upholding principles of due process and transparency is paramount to ensuring that legal procedures are meticulously followed, as in the case of Mr Gambaryan. By adhering to a clear and transparent process, the government reinforces the rule of law and demonstrates a steadfast commitment to fair treatment, bolstering confidence in the justice system. Additionally, the Nigerian government must communicate openly regarding the specific charges levelled against Mr Gambaryan. Publicly disclosing these charges will provide clarity to Binance, the international community, and the Nigerian public and facilitate a more informed discourse surrounding the case. Through transparent communication, misconceptions can be dispelled, and confidence in the judicial process can be fostered.
Furthermore, the government should actively seek resolution through dialogue with Binance. Establishing open communication channels and fostering a collaborative approach to resolving the situation can yield constructive outcomes. Binance has expressed willingness to cooperate with investigations and address any concerns, making dialogue an effective avenue for reaching a mutually beneficial resolution. Considering the broader impact of Mr Gambaryan’s continued detention without bail, it is crucial to recognise the potential ramifications on Nigeria’s reputation as a business-friendly nation. Swiftly resolving the situation in a manner that protects national interests while nurturing a favourable investment climate is essential for safeguarding Nigeria’s standing in the global business community.
Moreover, regulatory clarity is paramount amid the rapidly evolving cryptocurrency market landscape. Collaborating with Binance and other stakeholders to develop comprehensive regulations for cryptocurrency use in Nigeria can provide much-needed guidance and stability. Establishing a clear regulatory framework will facilitate future interactions and promote a conducive environment for innovation and investment in the cryptocurrency sector. The path forward for Nigeria is clear. The government must prioritise open communication and due process when dealing with foreign companies. Releasing Mr Gambaryan while the legal process unfolds would be a positive step. Additionally, engaging in constructive dialogue with Binance, similar to the US approach with TikTok, could help address concerns and pave the way for a more collaborative future.
Nigeria has a golden opportunity to reposition itself as a leader in Africa’s tech revolution. However, this will require a commitment to transparency and the rule of law. The Gambaryan case is a stark reminder that there are better answers than detaining individuals without giving them their day in court. It is time for Nigeria to embrace a more open and welcoming approach that fosters innovation and attracts the investments crucial for its future prosperity.
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