Nigeria wants Binance to share information on its top 100 users and all transaction history for the past six months.
According to a report by the Financial Times, the government also wants the cryptocurrency exchange to settle any outstanding tax obligations, even though it has stopped offering services in naira.
The country recently detained two Binance executives, and a Wired report has identified them as Tigran Gambaryan, a former US federal agent leading Binance’s criminal investigations team, and Nadeem Anjarwalla, the exchange’s regional manager for Africa based in Kenya.
The country’s request forms part of its negotiation with the crypto exchange. While there are no indications if it has accepted to share these details, Binance said in a recent statement: “While it is inappropriate for us to comment on the substance of the claims at this time, we can say that we are working collaboratively with Nigerian authorities to bring Nadeem and Tigran back home to their families.”
Binance’s government law enforcement system
In its government law enforcement request system policy, the exchange highlighted that government and law enforcement agencies can submit information requests.
“Binance will review each case and cooperate on a case-by-case basis to disclose information as legally required, in accordance with our terms of use and applicable laws.”
Under its terms of use, a portion titled information sharing read: “We may be required under applicable law to share information about your Binance account and account history with third parties…”
In a portion of its privacy laws, the exchange said it might share users’ information with courts, law enforcement authorities, regulators, attorneys, or other third parties to comply with laws and legal obligations, “to detect, investigate, prevent or address fraud or credit risk, other illegal activity or security and technical issues, to report suspected illegal activity or to assist law enforcement in the investigation of suspected illegal or wrongful activity.”
Between January 1 and November 13, 2023, Binance processed over 52,700 law enforcement requests, serving 12,699 registered law enforcement officers globally through its Government Law Enforcement Request System. According to reports, only 50,000 requests were handled in 2022.
In a statement titled ‘Binance and Nigerian Law Enforcement: Partnership to Foster Responsible Growth,’ on Wednesday, the exchange said complying with the applicable laws and regulations in the countries where it operates is a top priority. “We proactively engage with regulators and law enforcement whenever we can contribute insight, intelligence, or expertise to help protect users, identify and prosecute criminals, or stop or prevent unlawful activity,” it said.
The firm highlighted that between June 2020 and February 2024, its financial crime compliance teams responded to 626 information requests from Nigerian law enforcement agencies or related to investigations pertinent to Nigeria.
It said the information provided helped agencies, such as the Nigeria Police Force, the Economic and Financial Crimes Commission (EFCC), and INTERPOL Nigeria, to tackle crimes ranging from scams and fraud to money laundering, blackmail, kidnapping, and extortion.
It noted that in January 2022, it restricted 281 accounts belonging to Nigerian residents due to money laundering concerns. It added that in recent months, its team visited Nigeria twice – in November and December 2023.
“Our Law Enforcement Training team delivered two full-day sessions to EFCC officials in Abuja and Lagos, with more than 30 investigators attending each of them. The training focused on practical aspects of cryptocurrency investigations,” it said.
Nigerian authorities have blamed Binance for aiding speculative activities that have contributed to the depreciation of the naira. Since February, the government has cracked down on cryptocurrency exchanges, restricting access to their websites and recently threatened fines.
Recently, Olayemi Cardoso, governor of the Central Bank of Nigeria, said $26 billion passed through Binance Nigeria from sources and users the apex bank could not identify.
The prolonged standoff between Nigeria and Binance is raising concerns in the crypto industry. While players believe the government is within its right to ask for the list, they suggest that the list of top users may not accurately depict illicit flows.
“There is a chance that the top 100 users do not siphon the government money. This is business; people can have large volumes because they have the capital to do the business, which doesn’t necessarily mean they stole the money to do the business. Giving the government this information violates these people’s privacy,” Chimezie Chuta, founder and coordinator of Blockchain Nigeria User Group, told BusinessDay.
