An umbrella body of blockchain organizations in Nigeria, the Blockchain Industry Coordinating Committee of Nigeria (BICCoN), has reacted to the series of upheavals in the Nigerian blockchain industry.
Concerns Over Prolonged Legal Tussle
In a statement signed by Lucky Uwakwe Arisukwu, the chairman of the body, the inter-community working group expressed concern over the extended legal battle with the global crypto exchange platform Binance. This conflict, they argue, threatens to damage the nascent Nigerian blockchain industry.
Impact on Nigerian Startups
BICCoN highlights how unresolved issues are causing Nigerian startups to lose credibility, missing out on global investors and partners. As a unified voice for the Nigerian blockchain industry, BICCoN is at the forefront of suggesting policy ideas to industry regulators.
Decline in Investments
“These events have led to a chilling effect on investment, with a notable decline in foreign investments and collaborations with Nigerian web3 startups,” the group claimed.
Background of the Legal Conflict
In an effort to crack down on what they called ‘financial market manipulation and naira sabotage’, Nigerian authorities have been in a prolonged legal battle with Binance. This led to the detainment of two of the exchange’s executives.
Detainment of Binance Executives
In February, Nadeem Anjarwalla, a British Kenyan regional manager for Africa, and Tigran Gambaryan, a United States citizen and Binance’s head of financial crime compliance, were detained and charged with tax evasion by Nigeria’s tax agency, the Federal Inland Revenue Service (FIRS).
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Escalation of Legal Issues
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Nigerian authorities filed criminal charges against Tigran Gambaryan. Shortly after, Nadeem reportedly escaped from custody under bizarre circumstances. Efforts to repatriate Nadeem to Nigeria, in partnership with Kenyan authorities, have been unfruitful.
Accusations and Allegations
Binance CEO Richard Teng initially claimed he was working closely with the Nigerian government to resolve the situation. However, he later accused Nigerian authorities of demanding a hefty bribe to drop the money laundering charges against the detained executives.
Petition and International Involvement
Last week, Tigran Gambaryan petitioned an Abuja Federal High Court to order Nigeria’s National Security Adviser (NSA) and the Economic and Financial Crimes Commission (EFCC) to pay compensation for his prolonged detention, claiming it violated his rights and pressured Binance. U.S. Congress members Representative French Hill and Representative Chrissy Houlahan visited him in detention, calling for his release.
Negative Impact on Blockchain Investments
According to BICCoN, the blockchain industry is inherently global, and fostering strong relationships with international partners is vital for Nigeria’s position in crypto innovation and economic development. The protracted regulatory issues involving Binance have had detrimental effects on startups, making them struggle to secure financial backing.
Collaboration Benefits at Risk
BICCoN noted that Nigerian law enforcement and regulatory bodies have benefited from partnerships with global blockchain companies like Elliptic and Chainalysis, which have provided tools and support for forensic analysis and investigations. The tension surrounding Binance threatens to disrupt these crucial collaborations.
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Domestic and International Investor Concerns
The imbroglio is affecting both foreign and domestic investors and entrepreneurs. Investors seek assurances that their investments are protected within a stable and supportive regulatory framework. The situation has adversely affected job creation and economic growth, with startups being key drivers of employment and technological advancement.
Long-term Perception Risks
BICCoN warns that the perception of Nigeria as a hostile environment for blockchain business and innovation could encourage investors to seek more predictable and stable investment destinations.
Recommendations from BICCoN
To address the lingering issue and foster a conducive environment for the blockchain industry in Nigeria, BICCoN provides several recommendations:
- Engage in Open Dialogue: Nigerian authorities and regulatory agencies should engage in open and constructive dialogue with Binance and other stakeholders to address concerns and work towards mutually beneficial solutions.
- Emphasize Transparency and Fairness: The government should ensure justice and due process in handling the Binance case, adhering to international best practices.
- Seek Collaboration: The government should actively seek collaboration with local and international blockchain communities and reassure investors of its commitment to a fair and transparent regulatory environment.
- Address P2P Trading Concerns: Conduct thorough investigations and provide transparent findings on the impact of peer-to-peer (P2P) trading on the naira.
- Develop a Comprehensive Regulatory Framework: Create a clear regulatory framework to guide compliance, taxation, and consumer protection while promoting innovation and growth in the crypto industry.