Difficult times for Binance: scandals, exit from markets and admission of guilt by the founder
2023 turned out to be just a prelude to Binance’s growing problems with governments around the world. In recent months, the exchange has faced serious challenges from regulators and authorities in various countries.
Nigerian history
At the end of February, the Financial Times reported the detention of two top managers of the company in Nigeria — Nadeem Anjarwalla and Tigran Gambaryan.
Binance representatives flew to the country after the authorities decided to ban several digital asset trading sites. However, upon arrival, they were detained by officials from the National Security Adviser’s office and their passports were confiscated.
Authorities accused the exchange and its executives of manipulating the naira (NGN) exchange rate. Information appeared that Nigeria allegedly demanded compensation in the amount of $10 billion from Binance. However, subsequently the trading platform and adviser to the country’s president Bayo Onanuga denied these rumors.
On March 5, the exchange began gradually suspending operations with NGN, including P2P, Binance Pay and Invest services.
The local House Financial Crimes Committee has summoned Binance CEO Richard Teng for questioning over alleged terrorist financing and money laundering. Nigeria also demanded that the company provide a list of the country’s top 100 users and its entire transaction history for the past six months.
After the expiration of the 14-day detention period, the arrest of Binance top managers was extended until April 4. However, Anjarwalla managed to escape from Nigeria using a Kenyan passport.
On the eve of the incident, authorities charged top managers and Binance Holdings Limited with tax evasion on four counts, including failure to register with the local Federal Tax Service. The government’s case was filed at the Federal High Court in Abuja on March 25.
In an interview with The Record, the wife of the top manager who remained in Nigeria, Yuki Gambaryan, said that she regularly talked and corresponded with her husband, but now she cannot contact him directly. According to her, he is in a room in the guest house, from which he is not allowed to leave.
“The people working on this problem at Binance send him messages with updates, and he just sits and waits for someone to do something. This is difficult for him, because Tigran is a very nervous person,” she added.
In addition, the Gambaryans have two children — a five-year-old boy and a ten-year-old girl. Yuki noted that “it is becoming more and more difficult to remain positive and maintain a good mood.”
At the same time, Binance assured of working with the Nigerian authorities to resolve the issue.
Branch in the Philippines
Back in 2022, think tank Infrawatch PH sent a letter to the Philippine Department of Trade and Industry calling for an investigation into Binance for illegal marketing campaigns.
At that time, the matter did not go beyond written complaints, and ex-CEO of Binance Changpeng Zhao planned to apply for licenses in the country. The head of the company expected that the procedure could be completed within a few months.
However, in the same year, the Central Bank of the Philippines suspended the consideration of applications and the issuance of licenses to virtual asset service providers for three years, so the initiative to officially enter the local market had to be frozen.
Binance continued to operate in the country without a license, and in November 2023 authorities accused the company of providing financial services without proper registration.The Philippine Securities and Exchange Commission (SEC) has threatened employees of organizations involved in promoting or trading on the platform with up to 21 years in prison and a fine of PHP 5 million (~$88,700).
In March 2024, the SEC began taking steps to limit local traders’ access to Binance services. The agency approved the submission of an official request to the National Telecommunications Commission to block the website and other web pages of the exchange.
The Commission noted that the company offers a wide range of financial instruments without a license: spot trading of digital assets with leverage, options, futures, crypto savings accounts, staking service and ICO platform.
Failure of the Russian successor
On March 25, the CommEX crypto exchange unexpectedly announced a gradual suspension of operations. Starting April 23, the spot market will close, and starting May 10, the official website of the platform will stop working.
In September 2023, Binance left the Russian market and sold its business to CommEX, concluding a corresponding agreement. Afterwards, the migration of users to the new platform began.
By November, the volume of P2P trading on the new exchange reached 90 million rubles, and the number of registered accounts exceeded 200,000. From January 25, all users were allowed to post advertisements on the internal P2P platform.
At the end of February 2024, CommEX reported difficulties in withdrawing rubles through the fiat channel.
A month later, the company announced it would cease operations, citing a “thorough review of the current situation and a review of strategic plans.” Representatives of Binance in a comment to ForkLog clarified that CommEX did not fulfill its obligations under the concluded deal.
The platform is currently negotiating with other service providers regarding the sale of their business in the Russian Federation.
At the same time, Binance became a member of the Global Travel Rule Alliance. The platform provides the infrastructure to comply with the recommendations of the Financial Action Task Force.
According to a statement from the exchange, this “strategic move” is aimed at increasing compliance levels and strengthening data security.
Recall that in November 2023, the founder of Binance pleaded guilty to failing to maintain an effective anti-money laundering program as the head of the company. As part of an agreement with the US Department of Justice, he agreed to pay a fine of $50 million and resign from his position as CEO.
Zhao’s hearing will take place on April 30. He faces up to 18 months in prison, although previously there was talk of a 10-year sentence.
My name is Jay Skrantz, and I’ve been a freelance writer for 10 years, concentrating largely on investment brokerage, mutual fund investing, and financial analysis topics. As a reporter, I’ve written extensively for a wide variety of sites and publications like SeekingAlpha, MoneyShow, and MotleyFool. I’ve also done substantial freelance work for a number of financial publications, including MarketWatch, CIO Magazine, and TheStreet.
