In late February of this year, two Binance employees were detained by Nigerian officials without notice or a public announcement of charges. In the weeks that followed, Nigerian prosecutors charged the two with money laundering and tax offenses that are entirely divorced from the personal conduct of either man. One of those Binance employees, Tigran Gambaryan, was, in fact, the company’s lead law enforcement liaison – a former IRS criminal investigator and global educator on the use of blockchain technology for identifying and combatting precisely the kind of offenses that he is now unjustly facing in a Nigerian court.
Note: The views expressed in this column are those of the author and do not necessarily reflect those of CoinDesk, Inc. or its owners and affiliates.
Andrew C. Adams is a partner in the New York office of Steptoe & Johnson LLP, and a member of the firm’s blockchain and cryptocurrency team. He is a former Acting Deputy Assistant Attorney General for DOJ’s National Security Division.
Official response from the United States, diplomatic or otherwise, has been lacking, at least in any public forum. Diplomatic and official responses present a complex problem for U.S. officials, of course, who must consider multiple valences of partnership even with a country that otherwise appears to breach basic norms of due process and ordered justice.
An official pronouncement that an individual has been “wrongfully detained,” for example, carries with it an impetus under federal statutes and regulations toward the issuing of economic sanctions against targeted foreign officials. That prospect in turn carries risks for restricting negotiating and policy space, as well as the risk of inefficacy where other countries fail to implement similar economic countermeasures.
The United States has, however, a well-tailored tool at its disposal for signaling its objection to Nigeria’s abuse of its police power, while revoking significant funds that otherwise might go toward the very authorities now engaged in that abuse. In response to the patently unjustified charges against Gambaryan, the United States should immediately cease the transfer of forfeited funds to Nigeria under the Department of Justice’s “international sharing” program.
The Department of Justice collaborates every day with law enforcement agencies across the world. Those collaborations include joint investigations and operations ranging from anti-terrorism to cross-border money laundering to cybersecurity and beyond. In DOJ’s work to battle international kleptocracy and its ill effects on U.S. business and global populations, international partnerships are especially indispensable.
As one means of fostering that international cooperation, U.S. law provides a mechanism for the DOJ (and in certain instances, the Department of Treasury) to reward foreign partners for assistance in law enforcement actions through the “sharing” of forfeited property – that is, proceeds of crime seized by the DOJ in the course of its prosecutions – with those foreign partners. The procedures for determining when, how much and to whom forfeited assets may be shared is generally governed by treaty or other memoranda of understanding, and requires both the approval of the Attorney General (or Secretary of the Treasury) and the concurrence of the Secretary of State.
Importantly, these programs are entirely discretionary: “Whenever property is civilly or criminally forfeited … the Attorney General or the Secretary of the Treasury, as the case may be, may transfer the forfeited [property] to any foreign country which participated directly or indirectly in the seizure or forfeiture of the property.” When invoked, the transfer of assets under these programs can be both symbolically and materially important for foreign partners. A recent international sharing agreement reached between the United States and Estonia, for example, was designed to route much needed funding to Ukraine – a transfer heavy with both symbolic and material significance.
The withholding of such transfers consequently carries a similar moral and material weight.
Nigeria has accused Gambaryan – again, a mid-tier employee whose role at Binance has no conceivable connection to the accusation – of engaging in a $35 million money laundering scheme. Coincidentally, the Department of Justice in fiscal year 2023 transferred just over $20 million to Nigeria through the Department’s international sharing program. In 2020 that amount was over $310 million. This should stop.
As a discretionary program, the DOJ, Treasury and the State Department are all empowered to cease these transfers under the international sharing protocols. They should do so here, when the purpose of the program – to incentivize foreign partners to uphold the rule of law through cooperation with U.S. enforcement efforts – is frustrated through transparently arbitrary, lawless prosecutions.
A decision and announcement to halt forfeiture transfers to Nigeria has the benefit of imposing a direct cost on the Nigerian authorities and legal apparatus that is directly implicated by the Binance affair. The withholding of shared funding requires no intermediaries or multilateral coalition to make that U.S. policy decision an effective deterrent – no banks or foreign partners are required to amplify this policy, as would be the case with a formal sanctions designation against particular individuals or institutions in Nigeria.
The discretionary aspect of the program also provides for negotiating space and diplomatic flexibility. Unlike standard economic sanctions programs, there is no need for a politically charged “rollback” of an announced designation – U.S. agencies would simply be poised to resume cooperative sharing based on a straightforward, tangible change in Nigeria’s behavior, namely the release and exoneration of a wrongfully detained American citizen.
