(Bloomberg Businessweek) -- ↵ ↵
Tigran Gambaryan has investigated illegal tax shelters for the California Franchise Tax Board, served in the criminal investigation division of the US Internal Revenue Service and done a stint in The Hague working with Europol. Over the years, he developed a specialization in tracing cryptocurrency use by criminal enterprises and helped shutter sprawling contraband marketplaces such as Silk Road.
Three years ago, he joined the cryptocurrency platform Binance, which was trying to bolster its internal policing and buff up a tarnished public image. Since then, Gambaryan has worked with fraud and financial watchdogs worldwide to help freeze more than $2.2 billion in assets.
Today, he’s in a Nigerian jail cell, charged with money laundering and operating an unlicensed financial institution.
Gambaryan’s detention underlines the fraught relationship between cryptocurrency platforms and law enforcement. In countries such as Nigeria, with sharp currency fluctuations and a weak rule of law, authorities are often dismayed that citizens in search of greater financial security turn to virtual currencies and exchanges that officials say flout local regulations and foster criminality. Binance Holdings Ltd., which allows millions of users worldwide to buy and sell cryptocurrencies, is being closely watched by governments around the world after it last year pleaded guilty to criminal charges in the US and agreed to pay $4.3 billion in fines.
Nigeria’s objection is related to direct trades between individuals on so-called peer-to-peer exchanges, which offer savvy users a path to profit. As values fluctuate, it’s sometimes possible to buy, say, Bitcoin with a currency such as Nigeria’s naira and then immediately sell the holding for dollars at a price that beats the official exchange rate.
Nigeria blamed such activities for accelerating a plunge in the naira last year, when it fell by half against the dollar. Over the same period, Binance users in Nigeria completed more than $20 billion in transactions on the platform.
In June 2023, the Nigerian Securities and Exchange Commission ordered the company to stop marketing to locals. Binance contends that it has no control over prices published on its peer-to-peer exchanges, but senior officials in Abuja began to accuse Binance and other crypto exchanges of currency manipulation.
Gambaryan’s job at Binance included training government investigators around the world to more effectively trace crypto assets. The company says that in Nigeria his team responded to more than 600 information requests from authorities in 2022 and 2023, leading to asset seizures worth at least $400,000.
But there were signs his quasi-ambassadorial role there might be under threat. Gambaryan visited the country in January to discuss information sharing and meet with a parliamentary committee that wanted Binance to testify about financial crimes. After that meeting, according to an account published by Binance’s chief executive officer, a person purporting to represent committee members told a company attorney that any difficulties could easily be resolved with a secret cryptocurrency payment. Binance says it rejected the notion outright. The Nigerian government says it has no knowledge of the request.
Gambaryan and his colleagues immediately left Nigeria, concerned for their safety and fearing arrest. It was a “very close call,” says his wife, Yuki. He canceled a follow-up trip in early February, but soon afterward an official he trusted assured him it was safe to return. On Feb. 24 he boarded a plane in Atlanta, bound for Abuja.
After checking into a hotel the next day, he texted Yuki to say he was fine. She heard nothing else for more than 24 hours. Then, while she was bathing their 4-year-old son, a Binance colleague called her. “The moment I saw his name on my phone I just knew it,” Yuki recalls.
Gambaryan and Binance’s head of Africa, Nadeem Anjarwalla, had wrapped up a two-hour conversation with officials from Nigeria’s national security bureau, the president’s office, the securities regulator and the central bank. After a second meeting, with the Economic and Financial Crimes Commission (EFCC), armed men took them back to their hotel, ordered them to pack their bags and confiscated their passports.
Binance says Gambaryan and Anjarwalla, a British-Kenyan dual national, were told they would remain as “guests” in Nigeria until Binance delisted the naira, gave officials details of local users and provided further information on tax and financial compliance. Although Binance delisted the naira within 48 hours, the pair weren’t released. The office of the national security adviser, which controls the compound where they were being held, didn’t respond to messages seeking comment.
After holding Gambaryan and Anjarwalla for weeks, Nigerian officials on March 22 said the two would face charges. The next day, Anjarwalla escaped from the compound where they were being detained and fled the country using his Kenyan passport, which he’d hidden from his captors. Nigerian officials raged over his disappearance, threatening to ask Interpol to track him down, but in the end they took no action. Anjarwalla declined to discuss the matter.
Gambaryan was soon moved to Kuje prison—notorious for a 2022 jailbreak involving hundreds of Islamist fighters from the Boko Haram group. In April a Nigerian prosecutor seemed to acknowledge Gambaryan was being used as leverage, informing a judge that since Binance operates virtually, “the only thing we have to hold on to is this defendant.” Nigeria’s tax authority has since dropped its case against Gambaryan, agreeing to instead pursue it against Binance, but the EFCC is still insisting on criminal charges against him personally.
His family and lawyer say he was in very good health when he left the US, but in May, Gambaryan collapsed during a hearing, prompting the court to order the prison to send him to a hospital for treatment. In June two members of the US Congress visited Gambaryan at Kuje and reported he had contracted pneumonia and malaria while in custody.
His family says he’s suffering from a herniated disk and needs a wheelchair to get around, but the prison often denies him access to one. On at least one occasion, that kept him from meeting with US Embassy officials, a representative for his family says. The US State Department says it is in regular communication with him, is providing consular assistance and has demanded his release “on humanitarian grounds.”
On June 4 more than a dozen members of Congress seeking Gambaryan’s release wrote to President Joe Biden, Secretary of State Antony Blinken and Roger Carstens, who helped negotiate the recent prisoner exchange involving Wall Street Journal reporter Evan Gershkovich. The same week, 108 federal agents and prosecutors joined that demand in a separate letter, arguing that Gambaryan was being wrongfully detained.
As they were preparing for the resumption of his trial in September after a two-month hiatus, Gambaryan’s legal team had almost no access to him, in contravention of Nigeria’s constitution, according to a motion filed by his local lawyer. The trial is now on hold until early October, when the judge says he’ll decide whether to grant bail on medical grounds.
As an expert in cryptocurrencies and financial crimes, Gambaryan’s detention sparks outrage inside the company and has shocked regulatory professionals across the industry, according to Noah Perlman, a former federal prosecutor and Morgan Stanley veteran who serves as Binance’s compliance chief. Working to educate local law enforcement officials about crypto “is part of what we do on a very regular basis, and it's something that Tigran has done many times,” Perlman says.
“He’s a guy who’s devoted his adult life to this, who has real results, committed to doing the right thing,” he says, “and here he is, finding himself in custody.”
©2024 Bloomberg L.P.