The company man: US glacial response to Nigeria’s detention of former IRS crypto investigator rankles federal agents

In a move that could send a chill among business people working overseas, a Nigerian court ruled on Friday that a former American IRS investigator, Tigran Gambaryan, could stand trial on behalf of his employer, the crypto currency exchange Binance, and denied his request for bail. Gambaryan has been held in Nigeria since February. Dina Temple-Raston, host and managing editor of the Recorded Future News podcast “Click Here,” has been following the story for months and explains.

On Friday, Tigran Gambaryan — the head of financial crime compliance for Binance, the world’s largest cryptocurrency exchange — found himself in the last place he’d ever expected to be: a Nigerian courtroom on trial for something his company might have done.

A former investigator with the IRS, he’d spent more than a decade following illicit cryptocurrency transactions back to the people who made them. Rolling up, among others, the alleged founder of AlphaBay, Alexandre Cazes, and Silk Road’s “Dread Pirate Roberts,” Ross Ulbricht.

But now, after a spectacularly bad turn of events, Gambaryan is at the center of a battle between his company and regulators of the Nigerian government. Nigerian regulators have charged him personally for a roster of alleged crimes that they claim Binance has committed, and it is unclear how a middle manager, a former cop, has ended up shouldering the blame. Gambaryan has pleaded not guilty. He says he’s done nothing wrong. 

Even so, Nigerian authorities have detained Gambaryan since late February. “Click Here”spoke to more than a dozen current and former IRS and FBI agents who either knew Gambaryan well or had worked with him, and they all voiced the same concern: Why isn’t the US government doing more for one of its own? 

“You’re leaving a fellow law enforcement officer, even though he’s out of the game, kind of hanging,” said Matt Price, a former IRS agent who worked with Gambaryan on cases and at Binance. “We can’t believe they’re not doing anything.” And while Gambaryan’s plight appears to have been elevated inside the Biden administration in recent days, agents are asking, “What took them so long?”

“I have done nothing wrong,” Gambaryan said in a cell phone video he filmed back in March. “I’ve been a cop my whole life. I’m asking the United States government to assist me … I need your help, guys. I don’t know if I’ll get out of this without your help. Please help.”

Charges after an escape

Gambaryan’s video summed in 40 seconds what is otherwise a very complicated series of unfortunate events: “Hello my name is Tigran Gambaryan and I’m the head of financial crime compliance at Binance,” it began. “I have been detained by the Nigerian government for a month and I don’t know what is going to happen to me after today.”

As Gambaryan recorded the message, it was clear he was worried guards would stop him or grab his phone because just a few hours earlier he had awoken from a nap to learn that the Binance colleague who had originally been detained with him, Nadeem Anjarwalla, had somehow escaped. “I had nothing to do with it, I was not involved in any of it,” he said in the video.

Anjarwalla was Binance’s regional manager in charge of Africa and the afternoon of that video, according to three people familiar with what happened, Gambaryan found a Post-it note from Anjarwalla that essentially said he was sorry, but he was making a break for it. Anjarwalla had put pillows under the covers of his bed so guards would think he was still there. 

While it is unclear exactly how he got out of the government compound, it appears he asked guards if he could go to a nearby mosque to say prayers for Ramadan, and while he was at the mosque, he gave them the slip. 

As a result, it was left to Gamabaryan to break it to his captors that his colleague was gone. The Nigerian government now claims that it is in negotiations with Kenya to have Anjarwalla extradited.

Their anger and embarrassment at having lost Binance’s country manager seems to have fallen mostly at the feet of Gambaryan. Within days of the escape, the Nigerian authorities charged him, Anjarwalla and Binance itself with tax evasion and money laundering. 

The fact that Gambaryan found himself on the receiving end of all of this is particularly ironic because his job at Binance was to act as a liaison between law enforcement and the company and he traveled to Nigeria to teach local investigators how to track shady transactions back to the criminals behind them. 

An unexpected announcement 

The timing of the Nigerian government’s decision to detain Gambaryan and Anjarwalla in February came just months after the Justice Department reached a plea agreement with Binance’s founder and former CEO, Changpeng Zhao. Zhao had agreed to plead guilty to a roster of charges including tax evasion and money laundering related to lax oversight at the Binance exchange.

Zhao, known as CZ, agreed to step down as CEO, surrender his passport, and pay a multibillion-dollar fine. The announcement, rumored for months, rocked the crypto world and, some observers say, may have planted an idea into the minds of some Nigerian officials. 

“CZ was sort of a cult figure within the industry,” said Jacob Silverman, who wrote a book with Ben McKenzie on the crypto industry entitled “Easy Money: Cryptocurrency, Casino Capitalism, and the Golden Age of Fraud.” 

He said that people had looked up to CZ because he had managed to build the biggest crypto exchange in the world at breakneck speed, though “he had had a reputation for, you know, to use the old [Mark] Zuckerberg phase, ‘move fast and break things.’”

Silverman said there was always a whiff of something being not-quite-on-the-up-and-up about Zhao. Among other things, he would never travel to the US. He lived in the United Arab Emirates, but he was from Canada. 

“People kept wondering, what’s this guy up to in Dubai?” Silverman said, adding that kind of mystery was rife in the early days of the industry.

“There was a sense that the existing rules — especially the existing rules around banking and how money moves — shouldn’t really apply. And that’s certainly what animated a lot of the overseas growth of crypto, especially in East Asia and in Africa. There was this notion that ‘we should be able to move money wherever we want to without really much heed for how we’re doing it or how much we’re sending or to whom.’”

In its case against Zhao, the Justice Department said the former CEO prioritized Binance’s growth, market share, and profits over US law. He admitted to facilitating billions of dollars in cryptocurrency transactions without adhering to some of the most fundamental rules of banking.  Binance didn’t implement anti-money laundering protocols or adhere to “know your customer” procedures, which require that a bank or financial institution should know basic information about their customers. 

“For several years after Binance first opened in 2017, you could register a Binance account with just an email address and a password,” Silverman said. “And CZ knew that they were flagrantly in violation of Know Your Customer and anti-money laundering laws and regulations.” The Justice Department said as much when it charged Zhao, using internal texts and emails as proof that the attitude was “do it now, and ask for forgiveness later.”

A very familiar looking set of charges

In early January, just weeks after the Zhao plea agreement was made public, Gambaryan was part of a group of Binance employees who traveled to Abuja, the Nigerian capital, to meet with regulators from the Economic and Financial Crimes Commission.

“It was more of a training event with the EFCC, this is something that Tigran did quite a bit,” Price said. “He did these trips a lot and I had done it quite a bit. You come in and talk to law enforcement people, it’s usually a soft approach and you’re trying to build relationships and trying to train them how to do crypto investigations.” 

So in other words, Gambaryan was there to teach the Nigerian regulators how to track cryptocurrency transactions back to the bad guys. But the January trip, the first of two Gambaryan would make in the first part of 2024, took a bad turn. Nigerian officials said they were concerned that Binance was evading taxes and violating anti-money laundering rules.

A Nigerian official allegedly took someone from the Binance team aside during the early January trip. The official said that regulatory authorities were planning an investigation of the company and that the cost of settling the company’s legal problems would come to some $150 million. The authorities floated the idea of detaining some of the people in the delegation.

“Obviously Tigran said, ‘shit, I got to get out of here,'” Price said, adding that Gambaryan canceled his remaining appointments and hopped a plane back to the States. 

Yuki Gambaryan, Tigran’s wife, told “Click Here” that she heard about it all in almost real time. “He texted me, saying that, ‘Hey, this is just a heads up, but things are not going well right now and we might get detained.’ So I was aware of it.”

Then, just weeks later, Gambaryan got an invitation from the Nigerian government to meet with regulators again. Gambaryan told his friends that he felt he had an obligation to go. I asked his wife whether she was worried when he left for that second trip at the end of February. 

“I was. One hundred percent. Everybody was,” she said.

Soon after officials detained Gambaryan and Anjarwalla, they asked Binance to turn over all the Nigerian transaction data they had. Local newspaper reports then said the government had limited the request to the top 100 users. Central bank officials then began accusing Binance of manipulating the exchange rate of the local currency, the naira, and said the company couldn’t account for tens of billions of dollars in transactions.

All of which Binance has denied.

‘Some pretty bad people were using the platform’

The Justice Department’s indictment against the former CEO of Binance showed Zhao and his lieutenants had a penchant for rule-breaking.

“You had, for example, employees of Binance joking about the price of an AK-47 and as if they knew about it in the context of a conversation of terrorist groups using Binance,” said Silverman, the author of that book on cryptocurrencies. “I think the company, at least at the top levels, definitely had a sense that some pretty bad people were using the platform.”

Binance has been left to convince skeptics that they have changed. Richard Teng, the company’s new CEO, is a former Singaporean regulator. He hired people like Gambaryan to help redeem the brand. Nigerian regulators are either unconvinced, or opportunistic. It is hard not to see echoes of the charges the Justice Department brought against Zhao in what Gambaryan is battling in Nigerian courts now.

Nigeria has the second largest cryptocurrency adoption rate in the world, after India. Its crypto transactions topped $56.7 billion last year, according to Chainalysis, a blockchain data platform.

We spoke to half a dozen people close to Tigran’s case in both the US and Nigeria and they say there may have been something else about the Zhao plea agreement that caught the eye of Nigerian officials. CZ agreed to pay a record $4.3 billion in fines and restitution to the US government — one of the biggest fines in corporate history.

Silverman said it sends another message: “I think that indicates the gravity of the situation and maybe the amount of money sloshing around,” he said.

It doesn’t seem like a coincidence that days after Nigerian officials detained the two Binance executives in a government compound, they mused in the local press about potential billion-dollar fines.

Economic woes

Nigeria’s case against Gambaryan is about more than just trying to hold Binance and the cryptocurrency industry to account. There is a larger context: Nigeria is in the midst of a full-blown economic crisis. 

The numbers tell the story. Inflation in Nigeria is now well over 30%. Food prices are up even more than that and the local currency, the naira, has declined in value against the US dollar by some 40% since the beginning of the year. Just to keep up with inflation, Nigerians have started flocking to cryptocurrencies — and trading stablecoins, which are pegged to the US dollar — amongst themselves, peer-to-peer. 

Binance just facilitates those trades, it doesn’t control them. But it has angered Nigeria’s central bank nevertheless.

According to Feyi Fawehimni, a Nigerian scholar who has been writing about the nation’s  economic and political affairs for more than a decade, it was easy to blame Binance for economic problems. 

“People who wanted simple answers simply turned on them and said, Oh, OK, this economy is struggling. Nobody has dollars, who’s fault is this?” he said. “The dollar rate has jumped so significantly and the central bank had no control, so Binance became a kind of scapegoat.”

Central bankers didn’t want to blame the people trading naira, so they blamed the Binance platform instead. “These are unpopular people, right?” he said. “Nobody likes Binance. The US government doesn’t like them. The UK government doesn’t like them. Everyone is suspicious of them as a crypto platform across the world so someone in the government made the calculation that if we go after these people, nobody’s going to really fight for them.”

And the calculation was right. Gambaryan has given critics of Binance a human shape, a shorthand not just for crypto and all the problems it has caused in Nigeria. They didn’t have a former CEO to blame so they settled for a compliance officer. 

Nearly all the current and former IRS agents we spoke to for this story said Nigeria wasn’t alone in being unable to see the difference between Gambaryan and the company he worked for — the US government seemed to be doing that, too.

It wasn’t until mid-March that the US State Department seemed to focus on the case. Gambaryan’s wife said he had six visits from embassy personnel in Abuja while he was being held in the government compound. And they’ve visited him once since he’d been moved to Kuje prison. “They seem kind of out of touch to me,” she said. “They don’t seem to understand our sense of urgency.“

We spoke to four people at the State Department familiar with the case. They declined to be identified by name because they are not authorized to speak. But they claimed that the State Department didn’t like to interfere with legal proceedings in other countries and quickly added that Binance wasn’t just any company, before mentioning the Zhao plea agreement and the parade of cases against the industry more generally.

At the end of March, after Gambaryan had been in Nigerian detention for over a month, his case was flagged at the Justice Department’s Office of International Affairs. It’s part of the Criminal Division and is supposed to help the department sort through international criminal matters. It is unclear what the response to that query was.

But the rank-and-file agents we spoke to all agreed that the Gambaryan case was moving slowly. The thought is that if he was an ExxonMobil or Apple executive detained overseas, would the response have been quicker?

The only official email that we discovered that went out about Gambaryan among the rank and file came from a special agent in the Cyber Crimes Unit in DC. It was sent to a small group of agents, nearly all of whom either knew Gambaryan well or had worked with him. Two people who had seen the email described its contents as mentioning that Gambaryan had been detained and that he would always be part of the law enforcement family. There was no mention of elevating this up the chain of command, but the email did suggest that everyone keep Yuki Gambaryan and Tigran Gambaryan in their thoughts and prayers.

“I guess the best word for me would be, I think, it is sad,” said John Baker, who was at the IRS with Gambaryan and retired from the government a couple of years ago, so was at liberty to say on the record what other agents told us privately.

“Originally I was thinking he’s well known, so well regarded that somehow the United States would get involved to kind of figure out what’s going on. He has friends in various agencies, including the FBI or the US Attorney’s Office. But it sounds like most people don’t even know what’s happened to him or haven’t heard.” 

“Go after the companies and the people making the decisions,” he said. ”But when we’re dealing with people who are, you know, middle management, employees, people who have no way to make a decision other than to receive a paycheck, that’s crazy to me.”  

The CEO of Binance, Richard Teng, said on Bloomberg television last week that the company is talking to the Nigerian government to get Gambaryan back. “Our key priority is to get Tigran home safely, right?” he said on the sidelines of a cryptocurrency conference in Dubai. “Tigran is a person of the highest integrity, people that know him know that he has devoted his entire lifetime previously with US agencies. We are giving him and his family all the support needed and our key priority, our prayers, is to bring Tigran home safely as soon as possible.”

So given all of this one could be forgiven for wondering why Gambaryan returned to Nigeria at the end of February after that earlier close call. Hindsight is always 20-20. But his friends say that when the Nigerian government invited him back for that fateful February meeting, Gambaryan thought he saw an opening to make things right. 

Former IRS agent Price said that was just the way Gambaryan was. “He believed he could solve it,” he said. “Knowing Tigran’s personality, I certainly could see him believing he would be the only one that could fix it.”

On May 17, a Nigerian judge ruled that Gambaryan can stand trial on behalf of Binance because he is the company’s chief compliance officer and represented the company in meetings in Nigeria. Meanwhile, on April 30, a US court sentenced Chengpeng Zhao, the former Binance CEO, to four months in prison.

An earlier version of this story appeared on the “Click Here” podcast from Recorded Future News.

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