How Binance manipulated Nigeria’s forex market

The Economic and Financial Crimes Commission (EFCC) on Friday opened its money laundering suit against Binance executive Tigran Gambaryan and the cryptocurrency firm.

Mr Gambaryan, his fleeing colleague, Nadeem Anjarwalla, and Binance are being prosecuted by the EFCC.

He faces charges of tax evasion, currency speculation and money laundering involving $34.4 million. Mr Gambaryan and Binance have denied the charges.

The judge, Emeka Nwite, on Friday, rejected Mr Gambaryan’s bail application, describing him as flight risk. Another top executive of Binance, Nadeem Anjarwalla, escaped from a pretrial detention in Abuja in March, but his case was not cited by the judge as a basis for denying Mr Gambaryan bail.

Rather than granting bail to Mr Gambaryan, the judge ordered an accelerated hearing of the case.

The judge directed the EFCC to open its case immediately after rejecting the defendant’s bail application.

Alleged operation without licence

Thereafter, the first prosecution witness called by the EFCC, Abdulqadir Abbas, took the stand to testify against rhe defendant.

He recalled how he first met Mr Gambaryan at a meeting at the office of the National Security Adviser (NSA) in Abuja, Nigeria’s capital city.

Mr Abdulqadir, the director of operations at the Securities and Exchange Commission, was led in evidence by the prosecuting lawyer, Ekele Iheanacho.

He said the meeting was convened by the NSA, Nuhu Ribadu, to discuss Binance operations in Nigeria as it affects financial activities.

The witness told the court that Binance was operating a financial platform that was neither registered nor regulated by the SEC, thereby violating the country’s investment and securities law.

Binance’s public solicitation from Nigerians without statutory approval from SEC was an infraction, the witness told the judge.

Alleged forex manipulation

“It was clearly observed that the first defendant’s (Binance) mode of operation is against the provision of SEC Act 2007. Apart from not being registered, and making public solicitation without authorisation, the first defendant operates a net Naira Peer to Peer, P2P, transaction in exchange for crypto access,” Mr Abdulqadir explained.

He further said that due to the Naira P2P deployment by Binance and the large number of Nigerian users deliberately on that model, the transactions “adversely affected the official exchange rate.”

He added that “Binance platform became the reference point for determining exchange rate.”

Responding to an inquiry as to the extent of Binance influence on the value of the naira, Mr Abdulqadir said, “The (exchange) rate reached a stage where if one wants to exchange dollars, the Binance platform became the reference point. And that rate has no correlation or relationship with the official rate.”

After taking Mr Abdulqadir’s testimony, the judge adjourned further hearing until 23 May for cross-examination by the defence lawyer, Moses Modi.

Background

Binance and its officials face five counts of money laundering, tax evasion and currency speculation to the tune of $34,400,000.

The EFCC on 28 March, charged Mr Gambaryan alongside Binance and another of the company’s top executives, Nadeem Anjarwalla.

But only Mr Gambaryan, who pleaded not guilty to the five counts alleged in the case, was available for arraignment before the trial judge on Monday.

EFCC wrote in the charges that Mr Gambaryan’s colleague, Mr Anjarwalla, escaped from lawful custody in Abuja in March and has been on the run.

PREMIUM TIMES reported how Mr Anjarwalla, 38, escaped on Friday, 22 March, from the Abuja guest house where he and his colleague were detained after guards on duty led him to a nearby mosque for prayers in the spirit of the ongoing Ramadan fast.

The Briton, who also has Kenyan citizenship, was believed to have flown out of Abuja using a Middle East airliner.

Nigeria has been grappling with surging inflation, a problem partly exacerbated by a freefall of the naira especially at the parallel forex market.

The value of the naira to the United States dollar hovers around N1,400 and N1,500 at the forex market.