Binance, one of the world’s leading cryptocurrency exchanges, finds itself at the center of a regulatory standoff in Nigeria, with licensing applications on hold due to the detainment of its executive, Tigran Gambaryan. This situation has unfolded as Nigeria tightens its grip on the rapidly growing digital asset market, introducing new regulations to govern the sector.
Binance’s Licensing Hold: The Impact of Gambaryan’s Detention
The ongoing detainment of Tigran Gambaryan, Binance’s head of financial crime compliance, has significantly impacted the exchange’s operations in Nigeria. Gambaryan, along with colleague Nadeem Anjarwalla, was arrested during a visit to Nigeria on charges related to money laundering and tax evasion. Although the charges of tax evasion were dropped, Gambaryan remains imprisoned on money laundering allegations.
In a recent interview with Nairametrics, a Binance spokesperson outlined the conditions under which the exchange would consider complying with Nigeria’s digital asset regulations. These conditions include the release of Gambaryan from custody and a resolution of the ongoing legal disputes between Binance and the Nigerian government, which accuses the company of tax evasion, money laundering, and foreign exchange violations.
“We are pleased that Nigeria is advancing in its digital assets regulation,” the spokesperson stated. “However, until our executive is freed and our legal issues are settled, we will not pursue registration under Nigeria’s Securities and Exchange Commission (SEC).”
Nigeria’s Evolving Digital Asset Regulation
As part of its effort to bring more structure and oversight to the cryptocurrency market, Nigeria amended its laws surrounding Digital Asset Issuance, Offering Platforms, Exchange, and Custody in June 2024. This regulatory push aims to establish clearer guidelines for Virtual Asset Service Providers (VASPs), like Binance, through the Accelerated Regulatory Incubation Programme (ARIP). Under this program, VASPs can apply for an Approval-in-Principle status, a step toward full regulatory licensing.
However, to comply with these regulations, exchanges must open an office in Nigeria and operate under the SEC’s oversight. While other exchanges like Quidax and Busha have already secured approval under the new framework, Binance remains reluctant to move forward with its licensing application.
The Gambaryan Controversy and Its Impact on Binance’s Operations
The arrest of Tigran Gambaryan in Nigeria has brought significant attention to Binance’s operations in the country. Gambaryan was taken into custody along with Nadeem Anjarwalla, who managed to escape detention and flee to Kenya. Gambaryan, however, remains detained at Kuje prison and has faced serious health issues, including herniated disk, pneumonia, malaria, and tonsillitis. Despite his deteriorating condition and multiple requests for medical treatment, his detention continues to strain relations between Nigeria and Binance.
Calls for Gambaryan’s release have been made by several stakeholders, including Binance CEO Richard Teng, his family, and U.S. government diplomats who have engaged with Nigerian officials. These efforts highlight the gravity of the situation and underscore the need for a resolution that could allow Binance to move forward with its business operations in the region.
Binance’s Stance on Nigerian Regulations
Although Binance acknowledges Nigeria’s progress in developing a digital assets regulatory framework, the exchange remains cautious about moving forward until its legal issues are resolved. One significant factor is the accusation that the ARIP framework was hastily implemented following the arrest of its executives, with some critics claiming that the program lacks proper backing from the National Assembly.
A spokesperson for Nigeria’s SEC noted that while Binance has a substantial user base in the country, the exchange has yet to comply with local regulations. The spokesperson suggested that the company might be hesitant due to ongoing legal challenges but emphasized that Binance would eventually need to register under the ARIP framework to operate lawfully in Nigeria.
Tension Between Binance and Nigerian Authorities
The relationship between Binance and Nigerian authorities has become increasingly tense, with legal battles adding further complexity. As Binance seeks to clear its name from allegations of money laundering and tax evasion, its stance on Nigerian regulations remains one of caution. The arrest and prolonged detention of Gambaryan have only exacerbated this situation, putting the exchange’s future in Nigeria at a crossroads.
While Binance continues to operate globally, the exchange has made it clear that without the release of its executive and a resolution of the legal disputes, it will not pursue regulatory approval in Nigeria. The exchange’s spokesperson reiterated that Binance is committed to following the appropriate legal procedures and ensuring compliance with local laws once its conditions are met.
Moving Forward: What’s Next for Binance in Nigeria?
As the digital asset market in Nigeria grows, Binance remains in a precarious position. The exchange has expressed interest in aligning with Nigeria’s regulatory framework, but the unresolved legal issues surrounding Gambaryan’s detention and the accusations against the company have delayed its plans. For now, Binance’s licensing in Nigeria is on hold until both Gambaryan’s release and a settlement with the Nigerian government are reached.
The Nigerian government has made strides in developing a robust cryptocurrency regulatory structure, and it is expected that Binance will need to register in the near future to continue serving its large Nigerian user base. However, the exchange’s willingness to comply is dependent on the resolution of its legal challenges.
As Nigeria continues to advance its regulations, and with mounting pressure from both local and international parties, it is likely that a resolution will be sought sooner rather than later. The future of Binance’s presence in Nigeria will depend heavily on the outcome of these legal battles and the broader regulatory framework shaping the country’s cryptocurrency landscape.
