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Ryan Knutson: Three weeks ago, a man named Nadeem Anjarwalla went to Nigeria. He works at the cryptocurrency trading platform, Binance, and he went there to meet with Nigerian government officials. Here's Anjarwalla's brother, Khalil Anjarwalla.

Khalil Anjarwalla: He had been a couple of times before and he had told me probably I think a few days before that he had a pretty important trip planned and he was heading up over the weekend.

Ryan Knutson: Anjarwalla works for Binance as the regional manager for Africa, and while traveling to Nigeria was a normal part of his job, this trip was an important one. Nigeria had accused Binance of manipulating the country's currency, something Binance denies. Anjarwalla was going to talk to government officials about the accusation and try to help calm things down.

Khalil Anjarwalla: He was only planning to be there for a day or two. He flew in on a Sunday. He had meetings on a Monday, and I think he was planning to fly out sometime on Tuesday.

Ryan Knutson: Can you describe the next time you spoke with him and what he said?

Khalil Anjarwalla: He did let me know that he was in Nigeria, that he reached safe, and then I didn't really hear from him through the course of the day. It was pretty late on the Monday evening when I think I was the first that he reached out to to say that the meetings didn't go well. He was currently being escorted to his hotel to check out and being taken to a secure compound.

Ryan Knutson: Nigerian officials took Anjarwalla to a guarded house where along with his colleague, he's been held in detention ever since. Welcome to The Journal, our show about money, business, and power. I'm Ryan Knutson. It's Monday, March 18th. Coming up on the show, how two senior employees got caught in a fight between Binance and the Nigerian government. The tension between Binance and Nigeria has its roots a few years ago when lots of Nigerians started buying cryptocurrency. Now the country has the second largest cryptocurrency adoption in the world according to the data from Chainalysis. Nigerians buy cryptocurrency because it seems like a safe place to store their money. Nigeria's currency called the Naira has suffered cycles of high inflation and devaluation over the years. In January, inflation was up about 30% from a year ago. Here's our colleague, Caitlin Ostroff.

Caitlin Ostroff: I've talked to people in the past who have said that they view it as a better currency to have and transact in. If you think that the Naira might weaken, you would rather use something like Bitcoin, and I think that's different from how we think of it in the US, for example, where a lot of our thinking in our reporting certainly is that Bitcoin is kind of a speculative asset. Will it go up? Will it go down? But in less developed economies, you do see Bitcoin because even though the value fluctuates, it might be less volatile than some of the local currencies.

Ryan Knutson: How do people use their crypto accounts in Nigeria? Sort of like a savings account then almost?

Caitlin Ostroff: Yeah, a lot of people I've spoken to kind of use it as a savings account and they can say, my money is in either Bitcoin or in a dollar-pegged crypto, and I feel confident about it being safe there.

Ryan Knutson: Dollar-pegged cryptocurrencies, also known as stablecoins, are especially popular and many Nigerians have bought and sold their crypto on Binance. It's the largest cryptocurrency trading platform in the world.

Caitlin Ostroff: Binance is essentially a marketplace, so sometimes you'll have people switch out of a dollar-pegged cryptocurrency to go to the Naira because they need to pay their rent. In the same way that in the US you couldn't pay your rent in Bitcoin, you often can't do it in Nigeria too. And so Binance have said, we match buyers and sellers and they determine what the Naira is worth against these dollar-pegged cryptocurrencies. When someone needs Naira, someone else needs a dollar-pegged cryptocurrency, and it's just a matter of matching them.

Ryan Knutson: And so the place that many Nigerians go to trade their crypto for Naira is Binance.

Caitlin Ostroff: Yeah. So the idea is that Binance doesn't have a pool of Nigerian Naira that itself is sitting on and saying, we'll sell it to you for this price. What they're doing is what's called peer-to-peer trading. And that's basically like crypto jargon for saying, if Ryan wants to sell the Naira and Caitlin wants to buy it, we are going to match Caitlin and Ryan and they will determine what the price is going to be for that transaction. And so the market kind of gets made by people doing their own analysis and saying, what is this worth? And so that's kind of how Binance existed within this picture.

Ryan Knutson: For a few years, the Binance marketplace seemed to work well enough, but in 2023, as part of sweeping economic reforms, the Nigerian government ended the Naira's peg to the US dollar. The goal was to let the market play a bigger role in determining the Naira's value based on supply and demand, but it hasn't gone quite as the government had hoped.

Caitlin Ostroff: Earlier this year, the Nigerian Naira started to weaken considerably. For context, it's down about 40% this year so far. If you follow currency markets, that is a really strong price crash. 40%, especially in three months is a lot. And so kind of the bottom started falling out of the Naira. And one of the things that the government and currency traders that we've spoken to started to notice is that Binance kind of started to be used as the reference rate for what the Naira is worth.

Ryan Knutson: After the government de-pegged the Naira from the dollar two marketplaces started to emerge. There was the official marketplace at banks, and then there was the trading that was happening on Binance's platform and on Binance, the Naira was trading for much less. So when the Naira crashed, the Nigerian government started taking issue with Binance.

Caitlin Ostroff: In the course of this currency traders said they started to hear from people who were trying to buy the Naira, and while they would usually kind of cite the official rate, they started saying, "Well, why are you offering me this rate? Right. The rate on Binance is this." Usually Binance doesn't pop up as the proxy for what the Naira is worth. And so the government started to take notice of this and kind of blamed Binance for what they say is setting the rate of the Naira.

Ryan Knutson: But isn't that sort of what the Nigerian government said that they wanted, which is like, we're going to just let the marketplace determine how much this currency is worth. And Binance is just an exchange where people in the marketplace can buy and sell the currency to determine how much it's worth.

Caitlin Ostroff: And this is one of the more confusing aspects of the story, frankly, where officially that has been the government's line. At the same point, we spoke to currency traders who have said that even with that policy in place, the kind of unofficial stance that a lot of the local banks have taken is make sure that the currency kind of has a managed decline. Try not to let it fall too precipitously.

Ryan Knutson: So we want the market to decide, but we don't want it to crash super fast. We still want there to be a few breaks in that process.

Caitlin Ostroff: Yeah, it's confusing because it's not an official policy from the government. It's kind of this unspoken thing. Basically, it all boils down to what is the value of the Nigerian Naira. There's this struggle playing out between the Nigerian government and what they think the currency is worth and what the currency seems to have been worth on Binance's platform. And there's this disagreement about what role, if any, Binance had in causing the depreciation of the Naira.

Ryan Knutson: This is why Nigeria wanted to meet with those two Binance employees, Nadeem Anjarwalla and his colleague Tigran Gambaryan who's the head of financial crime compliance.

Caitlin Ostroff: They invited Binance to send employees to come to these meetings with officials from the Central Bank and the national security arm and the financial intelligence arm, and basically hash out all of these concerns that the government had.

Ryan Knutson: But for Binance, the meetings did not go well. That's after the break. Nadeem Anjarwalla is a British citizen who lives in Kenya with his family and Tigran Gambaryan is an American citizen who lives with his wife and two kids in Georgia. The last week of February, the two flew to Abuja, Nigeria's capital to meet with government officials.

Caitlin Ostroff: They thought this was going to be a short little trip. You go in on Sunday evening, you have a couple of meetings and you're out within a couple of days. They packed these small suitcases. They told their wives and their kids that they'd be back in a couple of days and they didn't really think it would be anything more.

Ryan Knutson: But they were wrong.

Caitlin Ostroff: Yeah, I mean, they get to their hotel Sunday night and they go to bed and they're like, in the morning we'll have all these meetings because we need to sort out this issue of why Nigeria thinks that we are to blame for the crash in the Naira. And so we're told by their families who kind of spoke to them after these meetings that first one was about two hours long, and it kind of had the feeling of progress being made. They sat down with everyone, they hash some things out, and they walked away feeling like that had been worthwhile and they had gotten somewhere, and then they were told, stay here. We want to have different people come for another meeting. And so they sat around for a bit and then they had the second meeting, and that one did not go as well. I mean, we don't know specifics, but the families have said that people were a lot more upset that whatever progress had been made in that first meeting, something happened. And so the two of them go back to their hotel and they are told, please pack your belongings. You are coming with us.

Ryan Knutson: From there, Anjarwalla and Gambaryan had their passports confiscated and were driven to a guarded compound where they were essentially put under house arrest.

Khalil Anjarwalla: The first few days was a lot of uncertainty, and Nadeem did not have his phone for various points through that.

Ryan Knutson: That's Anjarwalla's brother, Khalil again.

Khalil Anjarwalla: And he did let us know that the secure house that he was staying in, he had 24/4 guards monitoring him, that there were security cameras everywhere.

Ryan Knutson: Since then, Khalil says his brother has had more regular access to his phone.

Khalil Anjarwalla: We've had video conversations with him pretty much every day. I think he puts a brave front up, but it's very visible that he is under extreme amount of stress and strain. You can see it in his mannerisms, in his eyes.

Ryan Knutson: Khalil also says that their family's been in touch with the UK government in Binance to try to help bring him home.

Khalil Anjarwalla: It's his son's first birthday on the 21st of March. And so at the moment, we're really pushing to try and get Nadeem and his colleague out, particularly so he doesn't miss this incredible milestone. I'm a father of two sons and I just can't imagine how distressing it is to not be there for your son's first birthday.

Ryan Knutson: Binance says it's focused on getting its employees out. Here's our colleague, Caitlin again.

Caitlin Ostroff: They are trying to talk with the Nigerian government. They're talking, I think with governments for the country these two men are from, UK and the US and they're trying to sort this out, and so we've heard that that could include some sort of fine, although we don't know.

Ryan Knutson: Have these two Binance employees been charged with anything?

Caitlin Ostroff: No, and I mean that's another element of this, to what's confusing. So a Nigerian court allowed the detainment of them for two weeks, but there hasn't been any official charges. That two-week period is technically up. The Nigerian government has said there's some sort of investigation, but we don't know into what, and we've reached out to the Nigerian government and we haven't been able to find anything out or to get their side of what they think specifically these two men have done.

Ryan Knutson: Because neither Anjarwalla or Gambaryan have been charged with a crime, their lawyers argue they should be free to return home, but a Nigerian court said last week that the government can keep the men in custody until at least March 20th.

Caitlin Ostroff: For the families, the thing that I've heard repeatedly is that these might be senior employees, but these are not decision makers within Binance.

Ryan Knutson: When asked about why the Binance employees were being held, an advisor to Nigeria's president pointed to an article in the local press. The story said the government had asked the company to provide information about all of Binance's Nigerian users, and it alleged that the government had intelligence that there had been money laundering and terrorism financing on the platform. In a statement on its website, Binance said, "Complying with the applicable laws and regulations in the countries where we operate is a top priority." For Binance, this isn't the first time the company has sparred with a country's government. Last year, the US charged Binance with violating US anti-money laundering laws. Binance's founder and CEO pleaded guilty and stepped down, and the company was fined $4.3 billion. So what are the different ways that this situation might play out, do you think?

Caitlin Ostroff: I mean, best case scenario is the two men are released and they get to go back to their families. I think kind of more likely the expectation is there's going to have to be some sort of deal of some kind reach between Binance and Nigeria to get them released, but we don't really know. I think they could be charged with something. They could be sent to jail. Your guess is as good as mine.

Ryan Knutson: How has the crypto industry been reacting to the situation?

Caitlin Ostroff: I think they're all just a lot more nervous. The idea that two employees that certainly the company and their loved ones say are not decision makers here can be kind of taken and detained is really scary. And crypto companies have sometimes tenuous relationships with governments and being able to then have to try and extract these people from those countries is just a new layer of risk that I don't think was fully appreciated until now. And then on top of that, I think it's an escalation for how crypto companies operate in some of these markets where a lot of people in emerging markets do really like crypto because it's an alternative to their local currency, which can sometimes be flown to strong fluctuations or high inflation. And then on top of that, whether the locals will be able to continue with that and whether these companies will be able to continue to serve that is really up in the air because this is kind of a case we haven't seen before.

Ryan Knutson: That's all for today, Monday, March 18th. The Journal is a co-production of Spotify and The Wall Street Journal, additional reporting in this episode by Patricia Kowsmann and Alexandra Wexler. Thanks for listening. See you tomorrow.

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How Two Binance Employees Ended Up Detained in Nigeria - The Journal. - WSJ Podcasts - The Wall Street Journal