- Nigerian authorities have secured a court order compelling Binance to hand over user data.
- Authorities claim that the order will aid the investigation of alleged criminal activities on the exchange.
- Two Binance executives remain detained in the African country as part of the escalating crackdown on crypto exchanges to supposedly stop the naira devaluation.
Over the past few weeks, Binance has become the focus of a Nigerian crackdown on cryptocurrency exchanges in a supposed attempt to stem the naira’s free fall against the dollar.
As the crackdown escalates, a key dynamic has emerged, with authorities seeking to get data about Nigerian users of the exchange amid allegations of several illicit activities facilitated by the platform. Following a recent court ruling, the government’s data hunt has received a significant boost.
Binance Ordered to Hand Over Nigeria User Data
A Nigerian court has granted an interim order compelling Binance to hand over comprehensive data about its Nigerian users to the country’s Economic and Financial Crime Commission (EFCC), according to reports from local news outlets on Monday, March 18.
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The order was granted based on an ex-parte motion from the anti-graft agency. An ex-parte motion urges the court to grant an order without hearing from the other party, citing exceptional circumstances or urgency.
The country’s anti-graft agency argued in its motion that the interim order would help its investigation of a tip-off, suggesting that bad actors were conducting illegal activities like “money laundering and terrorism financing” on Binance. The agency asserted that investigations following this tip-off have already revealed illicit actors manipulating the price of the naira through wash trading schemes on Binance’s p2p marketplace. This accusation recently forced the exchange to shut down its naira p2p marketplace.
Binance in Legal Peril?
Speaking with DailyCoin, TEMPLARS Associate Albright Emmanuel explained that for civil cases, interim orders on ex-parte motions are typically only in place till a proper hearing can be held, usually with a validity period between seven to 14 days. For criminal cases like that of Binance, however, Emmanuel noted that a failure of the exchange to respond favorably to the order or seek permission to file an appeal within 14 days could have grave legal consequences.
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“In the event that Binance fails to obey the ex-parte order they will be held in contempt of court and this will attract possible sanctions which can range from fines to incarceration of its officials, etc,” the attorney told DailyCoin.
Amid the ongoing debacle, the Nigerian government has already detained two leading Binance executives for over three weeks.
Binance Executives Remain Grounded
On February 28, reports emerged that the office of Nigeria’s National Security Adviser had detained two Binance executives after they refused to discuss giving up user data outside their embassies.
The executives had arrived in the country at the invitation of authorities to negotiate a resolution to rising tensions. Last week, the detained executives were revealed to be U.S.-based Binance Head of Financial Crime Tigran Gambaryan and Kenya-based regional manager for Africa Nadeem Anjarwalla.
The government reportedly obtained a court order to detain both men for 12 days without formal charges. Despite the order’s expiration on Wednesday, March 13, the Binance executives remain grounded as authorities seek to extend the detention with a hearing on the matter scheduled for Wednesday, March 20.
In a Friday, March 15 statement, the U.S. Chamber of Digital Commerce called on President Joe Biden’s administration to intervene in the detention of Gambaryan, who was once a special agent of the Internal Revenue Service. The group questioned the lawful nature of the detention, warning that it sets a dangerous precedent, potentially signaling to foreign governments that Americans working in the crypto space could be subjected to unlawful treatment with impunity.
"This action is a flagrant violation of international law. And while Iran, Russia and China have similarly arrested American citizens in their countries as leverage or on dubious arguments, this is notably very different: Nigeria is a U.S. ally and recipient of substantial U.S. foreign aid, exceeding $1 billion annually. The Biden Administration must act to secure Mr. Gambaryan's release and return him to his family," the group added.
In statements to the press last week, Binance disclosed that it was actively negotiating the release of Gambaryan and Anjarwalla with Nigerian authorities.
On the Flipside
- How Nigerian authorities intend to enforce the recent court order remains to be seen.
- Some experts have argued that the Nigerian administration is only attempting to cover up its failings by scapegoating crypto exchanges like Binance.
Why This Matters
The recent court ruling further complicates Binance’s woes in Africa’s most populous country while putting the privacy of the exchange’s user data at significant risk.
Learn more about Binance’s Nigerian woes:
Unraveling Binance’s Nigeria Woes as Govt Hunts User Info
See how Arbitrum (ARB) reacted to its recent token unlock:
