It has now been more than two weeks since they were placed in pre-trial detention in Nigeria… Without knowing what they are accused of.
The American Tigran Gambaryan and the Kenyo-British Nadeem Anjarwalla, both employed by the cryptocurrency giant Binance, should have been decided on their fate on Wednesday March 13.
But the Nigerien authorities asked the courts for an extension of their detention and the court will not decide until next week.
When these two Binance representatives landed in Nigeria on February 25, they did not expect to meet such a fate.
They thought they could quickly dispel a misunderstanding about the alleged role of the internet platform in one of the worst crises facing the country, reported the Wall Street Journal, which spoke at length with the families of these employees.
Binance accused of “sabotaging the economy”
But the two men became the collateral victims of a vast offensive by the leading economic power of the African continent against the largest cryptocurrency exchange platform in the world.
Binance was accused at the end of February by Bayo Onanuga, the spokesperson for Nigerian President Bola Tinubu, of “sabotageing the national economy”.
Richard Teng, the Singaporean CEO of the platform, was summoned by the Nigerian Parliament to explain Binance's alleged terrorist financing and money laundering activities.
Anti-fraud authorities then asked the site to provide them with a list of perpetrators of the main transactions in naira (the local currency).
They claim that the equivalent of 25 billion dollars has passed through Binance over the past year by speculators seeking to manipulate the price of the national currency.
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Faced with this pressure, Binance finally decided to stop accepting transactions in naira since March 8.
But the continued detention of Tigran Gambaryan and Nadeem Anjarwalla demonstrates that the government is not finished with the platform.
Contacted by France 24, neither the Nigerian anti-fraud authorities nor Binance responded to the status of possible negotiations.
In any case, this is “the first time that a country has accused a cryptocurrency platform of being at least partly responsible for an economic crisis,” notes Alexandre Baradez, financial analyst specializing in cryptocurrencies for the stock broker IG France. .
And not just any one.
“This is clearly the worst crisis that the country has experienced in a very long time, especially in terms of the suffering inflicted on the population,” assures Chisom Ubabukoh, Nigerian economist at OP Jindal Global University in India.
Several attacks on grain granaries have taken place across the country in recent weeks, highlights the Financial Times.
Outbursts of violence symptomatic of a very sharp deterioration in living conditions and shortages of food products.
“Purchasing power has never been so low since the mid-1990s,” specifies the British financial daily.
Explosive economic cocktails
“All the ingredients were there for a crisis that is likely to mark a generation in Nigeria,” underlines Pieter Scribante, economist for Oxford Economics Africa, one of the main economic consulting and forecasting firms.
Following a devaluation of the naira decided by President Bola Tinubu shortly after coming to power in May 2023, the national currency lost more than 70% of its value against the dollar, notes the American channel CNBC.
At the same time, inflation has exploded.
Prices experienced a massive increase of more than 30% in February, "which has not happened in Nigeria for 27 years", underlines Pieter Scribante.
Result: more than 8% of the 200 million Nigerians, or 16 million people, are "in a situation of food insecurity", according to the International Monetary Fund.
All because of Binance?
The cryptocurrency exchange platform is mainly accused of having accentuated the collapse of the currency.
“Nigeria is the second country with the highest adoption of cryptocurrencies after India. When the economic situation began to deteriorate, Nigerians naturally flocked to these online services to exchange their naira into stablecoins 'backed by the dollar [cryptocurrencies whose value is modeled on that of the North American currency, Editor's note]", explains Nathalie Janson, economist and specialist in cryptocurrencies at Neoma Business School.
Binance and other similar platforms then allowed a sort of exchange rate parallel to the official one managed by the Central Bank of Nigeria.
The more Nigerians sold naira on these sites, the more the value of this currency collapsed, while the authorities also tried to limit this phenomenon on the official exchange rate.
“In fact, when we talk about the free fall of the naira, it is mainly in relation to its exchange rate on this parallel currency market,” underlines Pieter Scribante.
It is then enough to push the logic a little further to also make Binance the big bad guy of inflation.
Indeed, "due to shortages in Nigeria, most products have to be imported, which means paying suppliers in dollars. But if the national currency is weak compared to the greenback, you will have to spend a lot of naira on your imports , which feeds inflationary pressure. This is what we call imported inflation,” summarizes Alexandre Baradez.
But for there to be a real impact on the economy, the sums passing through these sites must be really significant.
The 25 billion dollars mentioned by the government have never been confirmed, underlines the Wall Street Journal.
But even if it is significantly less, "we are talking about billions which thus escape the official circuit and, therefore, the control of the Central Bank, it is a problem for the authorities", affirms Iwa Salami, director of the FinTech center (financial innovation) at the University of East London.
Right measures at the wrong time?
That being said, “Binance remains an intermediary, a facilitator, nothing more,” notes Chisom Ubabukoh.
The rush on this platform "is only a symptom of deeper economic problems. Blaming Binance is a political decision which amounts to looking for a scapegoat", believes Pieter Scribante.
Indeed, Nigeria's current ills did not begin with speculation on Binance.
“Upon coming to power, the new government undertook a series of reforms which had good intentions, but which were poorly executed,” says Chisom Ubabukoh.
There was the devaluation, and at the same time the decision to put an end to subsidies on the price of gasoline which had made it possible for a long time to contain inflation.
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“We are hungry”: Nigerians protest against the high cost of living © France24
“These were measures that had to be taken for a long time, but in our forecasts we estimated that the new government would have to spread them over a year and a half, whereas it did everything in a few months,” explains Pieter Scribante.
For him, Bola Tinubu wanted to “take advantage of the grace period after his election to pass as many unpopular measures as possible”.
But this political bet quickly came up against economic reality.
It must be said that the government had to face unforeseen security events which considerably complicated its task.
Indeed, “insecurity in the north of the country, a region where Islamist insurgents are rampant and where criminal gangs practice kidnappings for ransom, has had a severe impact on production and prices,” underlines the Financial Times.
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Blaming Binance may seem like the easy way out.
But it’s a strategy that also carries risks.
“It is a sanction against individuals who simply sought to secure their assets in naira whose value was visibly melting with the devaluation,” notes Nathalie Janson.
It is therefore politically risky for the government.
In addition, “if they can no longer do it on Binance, they will simply find other platforms that are even less transparent,” assures Iwa Salami.
For her, the ban only shifts the problem.
Finally, “Binance and similar platforms are widely used by small businesses who find it easier to use these services to pay, for example, suppliers abroad in dollars,” explains Iwa Salami.
In other words, the activity of these small businesses risks suffering from this standoff between the government and Binance... Which would not be good news for the economy.
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