From Richard Teng, Binance CEO: Tigran Gambaryan is Innocent and Must Be Released
As you may be aware, one of our beloved colleagues, Tigran Gambaryan, continues to be held by the government in Nigeria for more than 70 days. There has been much public commentary on this episode, and I wanted to take this opportunity to provide the facts so that the global community’s perception may not be distorted unfairly. I also feel that it’s time to speak out about this issue on behalf of the global business community. To invite a company’s mid-level employees for collaborative policy meetings, only to detain them, has set a dangerous new precedent for all companies worldwide.
I want to start by sharing a bit about Tigran, a person I’ve gotten to know well, and admire deeply, since I joined Binance. The greatest irony and most unfortunate fact is that a highly valued global financial crime fighter, who is professionally recognized by his peers in both the private and public sectors, has been detained in Nigeria for more than two months for spurious reasons.
Tigran has devoted his professional life to fighting financial crimes. Tigran’s decade as a federal cop was documented in a book called, Tracers in the Dark: The Global Hunt for the Crime Lords of Cryptocurrency, and we put out this blog a few weeks ago to share more about his illustrious career fighting crime.
He joined Binance after his time working for the U.S. IRS as a Special Agent to continue the work he started. He recognized that he could do even more good working for the largest company in this nascent industry to keep out bad actors and uphold market integrity. Anyone who has left public service for a private organization can tell you that sometimes you can make an even greater positive impact working for a private company that has an extraordinary scale.
Given this background, Tigran was hired in 2021 to help Binance develop and build stronger compliance controls, specific to law enforcement cooperation and stopping financial crime. As the head of Binance’s Financial Crime Compliance (FCC) team, he has been a strong advocate for Binance to develop policies and build compliance capabilities that set new industry standards. In 2022 and 2023, Tigran’s Financial Crime Compliance team assisted global law enforcement in freezing and seizing more than $2.2B worth of assets, including more than $285M in cooperation with United States agencies like the FBI, DOJ, DEA, and others.
Finally, it is important to note that Tigran did not go to Nigeria as a “decision-maker,” nor a “negotiator.” He was merely acting as a functional expert in financial crime and capacity building in policy discussions.
Background of the Nigeria Situation
I think it’s important to go back a couple of years to help provide a clearer picture of our activities in Nigeria. In fact, this story started nearly two years ago.
2022-2023
In May 2022, Nigeria’s Securities and Exchange Commission (SEC) published regulations for digital assets, bringing cryptocurrency under its purview. The regulations required crypto exchanges operating in Nigeria to obtain a permit from the SEC and comply with certain requirements. However, the regulations failed to articulate some of the key licensing requirements (e.g. application process, licensing fees, etc.), making it practically impossible to apply for a license.
Binance proactively reached out to the SEC on several occasions to seek practical guidance on the licensing process and offer to engage with the Nigerian authorities on a consultative basis.
For example, in a letter dated 22 June 2022, Binance stated that it ”would welcome and be grateful for the opportunity to collaborate with the SEC and other industry players in the blockchain coalition over the coming days to provide further clarity on the application of the new rules, particularly around the interaction of these rules vis-à-vis the position taken by the Central Bank of Nigeria, the fee structure for licensing, and the impact of the registration on the facilitation of bank accounts in the region.”
However, Binance never received any response from the SEC. To our knowledge, no Virtual Asset Service Provider (VASP) has been licensed under the new regulations to this date.
Almost a year later, on 9 June 2023, the SEC published a circular on its website to warn the Nigerian public against the activities of the Binance exchange and direct Binance to immediately stop soliciting Nigerian investors. The circular stated: “Binance Nigeria Limited is neither registered nor regulated by the Commission and its operations in Nigeria are therefore illegal… By this circular, Binance Nigeria Limited is hereby directed to immediately stop soliciting Nigerian investors in any form whatsoever.”
The reference in the circular to ‘Binance Nigeria Limited’ was incorrect. Binance Nigeria Limited is not affiliated with Binance and was registered by third parties in violation of the Binance trademark and for arbitrage purposes if Binance wished to establish a local presence in Nigeria. However, it was clear that the SEC’s intention was to target the Binance exchange.
Recognizing that the intent was to serve this notice on the authentic Binance exchange, Binance immediately suspended solicitation activities in Nigeria, including paid ads, SEO, online and offline events, as well as all targeted communications to users. Those restrictions are still in place to date.
In the letter we sent the SEC at that time, we reiterated that Binance was “fully committed to cooperating with the Commission and complying with the relevant regulations” and requested a meeting with the SEC (noting that a previous meeting had been requested by Binance but that no response had been received from the SEC).
Again, the SEC did not respond. We’ve continued to engage constructively with the SEC by providing commentary on their amended regulations as recently as March 29, 2024.
In August 2023, we decided to engage through Nigeria’s digital assets industry. We began supporting the Digital Currency Coalition (DCC), an industry association comprising leading local and foreign digital asset service providers in Nigeria, promoting regulatory engagement and lobbying for the introduction of crypto regulations.
In November 2023, we did what we do with law enforcement organizations all over the world: Binance conducted law enforcement training for the Nigerian Financial Intelligence Unit (NFIU) and Economic and Financial Crimes Commission (EFCC). Not only have these efforts helped uplevel cryptocurrency-related crime-fighting efforts around the world but they serve as a critical 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 Committee on Financial Crimes (HCFC) requesting that we appear at a public investigative hearing in less than two weeks.
2024
Ultimately, through informal channels, we managed to agree with the Committee that the hearing should be rescheduled to 10 January 2024, to provide a realistic timeline to prepare and send a delegation of Binance employees with expertise on the issues that were important to discuss.
Tigran Gambaryan and several other members of our team traveled to Nigeria to participate in this and other meetings. On January 5, Binance employees met with the NFIU to discuss information sharing as well as continued capacity building. The agreed next step was for the FIU to share a Memorandum of Understanding (MoU) setting out proposed terms and conditions for the sharing of anti-money laundering (AML)-related information.
On January 8, Binance employees had a face-to-face meeting with three members of the HCFC and a clerk in Abuja at the House of Representatives building for a scheduled pre-hearing engagement in private. The meeting was chaired by the Honourable Peter Akpanke, the Honourable Philip Agbese, and the Honourable Peter Aniekwe, as well as a clerk.
During the conversation, the Committee highlighted the important nature of the issues at hand and the lengths to which they were prepared to go to summon Binance, including issuing arrest warrants against our team and CEO and preventing our team from leaving the country. While concerning, it was understood that the HCFC does not in fact have the power to issue arrest warrants.
The Committee confirmed that the public hearing would proceed on the 10th of January and that Binance would be afforded an opportunity to respond to any allegations publicly in the presence of the petitioners, press, and over 30 agencies.
Despite multiple requests, Binance had still not received details of the allegations, and our employees, therefore, inquired if there was an opportunity to submit our responses in writing and in the absence of a public hearing. There were a number of reasons for that, including the sensitivity of the information and getting the opportunity to see the allegations in full and prepare a thorough substantive response. The meeting ended with the Chair confirming they would consider the matter and revert through Binance's local counsel.
However, as our employees were leaving the venue, they were approached by unknown persons who suggested to them to make a payment in settlement of the allegations. Later that day, our local counsel — representing us at that time — was summoned by the Committee through someone purporting to be their agent, who relayed the Committee’s terms and instructed our local counsel to advise us. Counsel reported back that he had been presented with a demand for a significant payment in cryptocurrency to be paid in secret within 48 hours to make these issues go away and that our decision was expected by the morning. Our team grew increasingly concerned about their safety in Nigeria and immediately departed. We, of course, declined the payment demand via our counsel, not viewing it to be a legitimate settlement offer, and clarified that we would engage in settlement negotiations on the following conditions:
Binance needs to see the relevant petition and/or the details of all allegations.
Any settlement must be official, recorded in writing, and signed by all relevant parties.
Any settlement must encompass all relevant agencies and be in full and final settlement of all allegations, including any potential historic tax liabilities, if applicable, with guarantees.
While the exact terms of any settlement may have to remain private, there would have to be some public acknowledgment that a resolution has been reached.
There should be no public hearing before the Committee.
Our contractors and employees are not to be intimidated, harassed, or detained.
Our counsel relayed Binance’s conditions, to which initially objection was taken. However, we were informed by our counsel that the Committee eventually agreed to the above.
Soon after returning from the trip, the NFIU shared the draft MoU, which scopes out Binance’s undertaking to voluntarily file SARs/STRs, provide training to Nigerian and other regional law enforcement agencies, and for both parties to cooperate with each other. We saw this as a positive development in the effort to cooperate on making crypto safer and free of criminal activity.
On February 5, a Binance advisor with deep local connections advised a meeting with the director of the Office of National Security Advisor (ONSA) who would become the central gateway for Binance to have its presence in Nigeria. Again, we saw this as a positive development because rather than dealing with multiple agencies/departments, we would be able to focus communications through one very senior and respected pillar of Nigeria’s law enforcement community.
In early February, our team was communicating with ONSA and EFCC regarding opportunities for a meeting. In one of these emails, we explained the “pivotal role (we play) in global law enforcement efforts. We engage in partnerships with law enforcement agencies worldwide, undertaking joint investigations and offering support wherever necessary. Notably, we have established a strong and productive relationship with our counterparts in Nigeria, including the EFCC.” The meeting agenda proposed by Binance included the following items:
Introduction to Binance and our global operations and compliance program.
Binance’s current cooperation with the EFCC and FIU.
Overview of the engagement with the SEC, measures taken by Binance in good faith to respect the SEC's directives and ONSA’s assistance with a way forward.
A petition before the HCFC and ONSA’s recommendations on engagement.
Strategy for enhancing our engagement and strengthening the relationship with ONSA.
A meeting was scheduled for February 26, 2024, at 2pm at ONSA’s offices in Abuja, Nigeria. It was confirmed that the following government representatives would be in attendance: the National Security Advisor; the Chief Executive of the SEC; and, the Deputy Governor of the Central Bank of Nigeria (CBN).
Despite the clear risks, Tigran Gambaryan and Nadeem Anjarwalla (Head of Binance Africa) received multiple assurances that they would be granted safe passage for their meetings.
Concerns over P2P NGN prices
At around this time, the naira (NGN), the Nigerian currency, was amid a steep decline, amounting to what some watchers referred to as the worst financial crisis in a generation. While many crypto platforms operate in Nigeria — and continue to do so to this day — Binance was the leading crypto platform operating in Nigeria at the time, and Nigerian traders were using the P2P product on the Binance platform to protect themselves against the currency decline. We began hearing concerns that the P2P NGN prices from merchant advertisements had influenced the country’s foreign exchange rate.
Binance’s P2P team engaged with the local community. What we learned was that due to the lack of official reference FX prices in Nigeria, people in Nigeria, including crypto and non-crypto players, were using the price averages of the P2P advertisements as a source of FX rate reference.
While the P2P market advertisement price (quotation price) is real-time and moves along with the market, it is not always a reflection of the actual traded price. Binance has no role in setting the P2P prices: in fact, P2P transactions are driven by individuals seeking to engage in direct buying and selling of particular crypto-to-crypto or fiat-to-crypto pairs. It's essentially a marketplace for crypto.
The P2P product does not have the same level of usage or the same depth of market and liquidity as the centralized exchange. Due to lower liquidity and higher volatility, people may see quotation spikes in the P2P market that do not necessarily represent real-world asset pricing, and quotations do not even lead to a trade necessarily. Part of the local community in Nigeria viewed those spikes as potential price manipulation, and given the wide usage of the P2P advertisement prices by merchants as FX rate reference, some suggested that Binance was a factor in the country’s volatile FX rate and currency depreciations.
The reality, of course, is that contributing factors of FX rates are complex and largely driven by macroeconomic policies. Here are a couple of helpful links on that topic:
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'
At the same time, our P2P team continued to work on several initiatives including removing abnormally priced ads, applying restrictions to relevant users, and separate controls for buy/sell limits. There were also intentions to add a last-traded price feed so quotation spikes would no longer be viewed as market prices. Below are a couple of blogs we put out at the time to make it clear that we are dedicated to providing a market-driven, fraud-free, and manipulation-free platform for users. The fact remains: we take our responsibility to protect users very seriously. To reinforce the point, we made it clear that if users are behaving in a malicious or manipulative way, they will be removed from the platform.
The February 26 meetings
On February 26, Tigran and Nadeem traveled to Nigeria and were present for the meetings they had scheduled and, as stated above, received multiple assurances for their safety. In their first meeting, they met with leaders from ONSA, the office of the President, the Central Bank, NFIU, EFCC, and the SEC.
The tone of the meeting was neutral — neither friendly nor hostile — and it seemed that overall progress was being made during the two hours or so that the meeting lasted.
One of the EFCC leaders, with whom Tigran had built a relationship over the last several months, took them aside and told them that everything was progressing well and that Tigran and Nadeem had no need to worry. The Binance employees were told that a further meeting would take place shortly after, this time involving the most senior leaders from ONSA, CBN, SEC, and the Ministry of Communications, Innovation, and Digital Economy.
After waiting more than two hours, the Binance employees were invited back into a meeting room albeit with different attendees than the ones announced — specifically, there were four members of the EFCC.
The leader of the group took on a hostile approach. He said that the issues involving Binance were of national security and made the following demands:
Delist naira from the Binance platform (this was the first time this request was explicitly made by Nigerian authorities to Binance).
Provide granular-level detail on all Nigerian users.
Provide financial/tax compliance information.
They further explained that, until such time as Binance would fulfill these requests, Tigran and Nadeem would be their “guests” and be moved for “security reasons” to a house in a high-security compound. Additionally, they requested that Tigran and Nadeem hand over their passports.
Following the meeting, Tigran and Nadeem were escorted to their hotel, asked to pack their belongings, and moved to the secure compound, which was controlled by ONSA. Their mobile phones were confiscated, and it was made clear to them that they were not free to leave. Both Nadeem and Tigran had no control over when and with whom they spoke.
From this point on, Tigran (a US citizen) and Nadeem (a British-Kenyan citizen) were under detention. Both the UK High Commission and the US Embassy were alerted in the overnight hours of the detention of Tigran and Nadeem.
The next day, Binance's legal counsel sent an email to the leaders of ONSA asking them to “urgently clarify the legal basis for the detention of [its] employees” and noting that their respective nation's embassies (U.S. for Tigran and UK for Nadeem) had been notified. Our note further stated: “We understand from our employees after conversations with you yesterday your main concern is the listing of the naira as a tradable asset on the Binance platform. This is the first time we have been made aware of this concern in relation to the listing of the naira on our platform. We are able to delist the naira from the Binance platform. However, we ask that you guarantee the immediate release of Tigran and Nadeem and that no restrictions will be placed on their movements, including their departure from Nigeria.”
The same day, ONSA responded by email, stating that Tigran and Nadeem were their “guests” and treated with “hospitality.”
We also received confirmation that day that the U.S. and UK governments had been briefed on the situation and were following up closely.
The next 24 hours were marked by aggressive behavior towards Tigran and Nadeem where they were accused personally of holding responsibility for the state of the naira and the overall economy, and allegations of terrorist financing and money laundering.
On February 28, we removed the naira pairing from our site and shut down the P2P product for Nigeria on the Binance platform. We advised ONSA of our actions in an email and requested that Tigran and Nadeem be immediately provided with “safe passage to the airport.”
No official response from ONSA was received that day.
On this day, the same EFCC leader with whom Tigran had become close over the past few months broke down emotionally to Tigran. He apologized and said it was his wrongdoing as he had given Tigran and Nadeem his word that everything would be OK, and that the meeting was supposed to be a friendly one.
Soon thereafter news of Tigran and Nadeem’s detention broke in global media. Nearly a month later, on March 23, we learned that Nadeem left unlawful detention. From that point on, things went from bad to worse for Tigran.
Where Are We Today?
On April 25, during a bail hearing for Tigran Gambaryan, the EFCC’s prosecutor said to the court, “The 1st defendant [Binance] is operating virtually. The only thing we have to hold on to is this defendant [Tigran].”
The message from the Nigerian government is clear: we must detain an innocent, mid-level employee and a former U.S. federal agent, and place him in a dangerous prison in order to control Binance.
Since I assumed the role of CEO of Binance, I have made it a key commitment to work with global regulators and enforcement agencies to uphold the integrity of the global financial system.
Over the past two and a half years, Binance has worked hard to restructure our organization and personnel and upgrade our systems. We have new leadership in place with deep compliance experience and impressive backgrounds ranging from top traditional financial institutions and leading tech companies, to law enforcement and major corporate entities.
Today, the Binance leadership team, including myself, report to a Board of Directors. The Board is responsible, as corporate steward, to safeguard the company’s interests as well as make key decisions to ensure the long-term sustainability and viability of the business. It is through this process that we have become a stronger, safer, and even more compliant and secure platform for our users. We have evolved dramatically as a business.
This ordeal has been deeply distressing for Tigran, his family and friends, as well as the entire Binance community. As mentioned above, to remove any doubt about suggestions that we had played a role in the country’s currency crisis and as a good faith gesture, I made the difficult decision earlier this month to turn off our P2P product on the Binance platform for Nigeria and end the trading of all naira pairs on the spot exchange product on the Binance platform. Our hope when we took this drastic step was that our colleagues would be released and Binance could continue to work with the Nigerian government to resolve any further concerns. Unfortunately, that didn’t happen.
We continue to do anything and everything we can to support Tigran. This support is unwavering.
Let Tigran go home to his family, and then Binance will work through the same process that we have done with Nigeria's law enforcement community voluntarily more than 600 times in the past. We will always work to protect innocent users, and bad actors are not welcome on our platform. We will work tirelessly with public and private partners to remove them. Furthermore, we will continue engagement with Nigeria’s Federal Inland Revenue Service (FIRS) on resolving potential historic tax liabilities.
It remains unclear to me as to why this is not a solution to which the Nigerian government officials are willing to agree. The Nigerian government has extraordinary power to determine the future of Binance and the broader crypto industry within its borders. At the end of the day, Binance wants to have a future where we work alongside the Nigerian government to be part of building a strong economy for the Nigerian people. But this crisis must come to a resolution quickly, and Tigran must be allowed to go home if we’re going to move forward.
Binance remains committed to embracing the opportunity that lies with taking an innovative approach to using digital assets and platforms but we also must build a future where we are seen, as we see ourselves, as good actors in the international community.
I'd like to express my deepest gratitude for the many notes of support we have received from around the world in response to this crisis, and I hope that my next update is one where our employees are safe at home with their families.
Richard Teng, Binance CEO.