The trial of Binance executive Tigran Gambaryan began Friday with an accusation.
But it wasn’t the one the courtroom in Abuja, Nigeria, was necessarily expecting — money laundering.
Instead, prosecutors levelled charges that Binance, the world’s top crypto exchange, was guilty of devauling the African nation’s fiat currency, the naira.
Abdulkadir Abbas, a director of Nigeria’s Securities and Exchange Commission, testified that Binance’s peer-to-peer trading platform acted as an unofficial marketplace for foreign-exchange trading in Nigeria.
Regulatory crisis
Abbas, who testified as a witness for the Economic and Financial Crimes Commission, said Binance’s activities “adversely affected” the naira’s official exchange rate, according to proceedings monitored by DL News.
The SEC director testified that Binance’s market size in Nigeria made the company’s peer-to-peer platform a reference point for determining the naira’s exchange rate.
The testimony followed a pre-trial hearing in which Gambaryan, 40, who has been detained since February 26, was denied bail after a judge deemed him a flight risk.
Currency woes
Nigeria’s anti-corruption agency has accused Gambaryan, his colleague Nadeem Anjarwalla, and Binance itself with perpetrating a $35 million money laundering scheme and tax evasion.
The two men and the company have denied the allegations. Anjarwalla, a British citizen, managed to escape from Nigeria on March 22 and has been traced to Kenya, where he is based as Binance’s regional manager.
Legal crisis
Binance had an estimated 13 million customers in Nigeria and has been embroiled in a legal crisis there since the start of the year.
Nigeria’s government had blamed Binance for the country’s currency woes early this year because the company allowed Nigerians to trade a digital version of the naira against Tether’s USDT, a stablecoin pegged to the US dollar.
Binance has denied accusations of foreign exchange racketeering and said its activities had no bearing on the country’s currency market.
The company then dispatched two executives ― Gambaryan and Anjarwalla ― to settle the simmering dispute in late February.
The pair was unsuccessful in reaching a compromise in a meeting and refused to hand over customer details to Nigerian authorities. They were subsequently detained, escalating the crisis.
In custody
Gambaryan who heads the company’s financial crimes compliance department, has been in custody ever since, despite pleas from his family and his employers. He has been charged on Binance’s behalf by Nigerian authorities.
Apart from negatively influencing the naira’s value, Abbas testified that Binance operated in Nigeria without registering with the SEC.
Binance had previously adopted a loose operating model that favoured a free-floating decentralised entity, under its founder, Changpeng Zhao.
CZ, as he is known in crypto circles, is no longer in charge of Binance and his replacement, Richard Teng, has pledged to focus on regulatory compliance.
Teng recently revealed that Binance tried to liaise with Nigeria’s SEC for regulatory clarity, but did not receive a response.
Gambaryan’s lawyer, Babatunde Fagbohunlu, requested an adjournment to review exhibits tendered in court for his cross-exam of the SEC director, which was granted.
The trial will resume on May 23.
Gambaryan is being held in Kuje Prison in Abuja.
Osato Avan-Nomayo is our Nigeria-based DeFi correspondent. He covers DeFi and tech. To share tips or information about stories, please contact him at osato@dlnews.com.
