Binance said Gambaryan, a former US Agent, “has no decision-making power in the company and should not be held responsible while discussions are ongoing between Binance and the Nigerian government”. 

Gambaryan was detained alongside Nadeem Anjarwalla, Binance’s Kenya-based regional manager for Africa. Both executives had flown into the country to resolve the company’s restricted website access. Anjarwalla fled the country with a smuggled passport, the office of Nigeria’s national security adviser (NSA) said. 

Last week, both executives filed a human rights violation suit at the Federal High Court of Nigeria, asking the office of the NSA and Nigeria’s anti-graft agency, the Economic and Financial Crimes Commission (EFCC) to release them, return their passports, and issue a public apology. 

Binance claims that Gambaryan—who leads Binance’s Financial Crime Compliance (FCC) team and was hired in 2021 to help fix the crypto giant’s complaint issue—has worked with Nigerian law enforcement in the past, providing information that helped tackle fraud and money laundering activities up to the tune of $400,000. The company said Gambaryan’s team facilitated multiple training sessions for Nigerian law enforcement on the role of exchanges in the digital asset ecosystem.

This is Gambaryan’s fifth week in detention. Last week, the Nigerian government filed tax evasion charges against Binance and sought an international arrest warrant for Anjarwalla, Binance’s regional manager for Africa who fled custody.

This sudden disruption wasn’t unique to Pascal. On Wednesday, February 22, news broke that Nigeria’s telecom regulator, the Nigerian Communications Commission (NCC), had restricted user access to the websites of Binance, Coinbase, and Kraken, accusing the companies of manipulating prices of the naira/dollar pair in unofficial markets.

These crypto exchange platforms became the go-to for direct crypto transactions—through their peer-to-peer trading feature—after Nigeria’s central bank abolished local financial institutions from enabling crypto transactions in 2021. The crypto exchanges have also played a significant role in determining unofficial exchange rates for the naira, with platforms like Binance often serving as benchmarks for local foreign exchange rates.

While the websites of Binance, Coinbase, and Kraken have been inaccessible in the country, crypto traders who spoke to TechCabal claim they now use alternatives like Bybit, Bitget, Kucoin, and Coincola and messaging platforms like Telegram, (which comes with an in-app wallet) to make transactions. However, Bybit has emerged as a favourite for these crypto traders who say the exchange’s low transaction fee—0.2%—is a reason for the choice. 

“Law enforcement in Nigeria notoriously follows a scapegoat approach,” claimed Caleb Nnamani, a technology reporter at Cardano-backed publication, Nodo. 

“If you’re going to do a thing, do it thoroughly,” Rume Ophi, a crypto analyst, told TechCabal, speaking on the spared exchanges. “It’s like robbing Peter to pay Paul.” 

As Nigerians turn to foreign alternatives to transact crypto, these traders have ignored local exchanges such as Zap, Furex, and Quidax. “Crypto-savvy Nigerians trust foreign exchanges because of their outsized liquidity,” Nnamani told TechCabal. “A hack to a global exchange behemoth comes with some assurances of payback.” According to him, Nigerian crypto traders don’t trust local exchanges to keep their funds safe in the event of a hack. 

“I think it comes down to popularity. We are more familiar with Binance, OKX, and the rest.” One crypto user said. “They have proven to be very good. I think that’s what is giving them the edge [over local platforms]”

A risky shortcut

Users’ options for crypto trade have not been limited to just alternative exchange platforms. Two Crypto traders who spoke to TechCabal said they have been trying out Telegram’s newly launched P2P trading platform as a workaround. Launched in September 2023, Telegram’s crypto wallet—a bot embedded within the messaging platform—allows users to trade cryptocurrencies directly with each other and even purchase crypto using their bank cards. While this method allows for the convenience of trading within Telegram, it is not a perfect fit for crypto traders. One crypto trader who spoke with TechCabal was sceptical about trading safely on the app. “It’s new and untested, and I’m unsure how they handle user complaints,” expressed the cautious trader.

These user’s fears are valid. Telegram offers a custodial wallet, which means it holds onto users’ access keys—critical for authorizing crypto transactions—which raises security concerns, as a third party holding the keys increases the risk of a leak if Telegram’s security is compromised.

A big concern with Telegram is its custodian wallet. Unlike other platforms, Telegram holds onto users’ private keys, which are essential for crypto transactions, meaning that in the event of a hack on Telegram, a user’s crypto could be stolen. 

Telegram did not respond to TechCabal’s request for comments.

Nnamani also expressed concerns about the limitations of trading on Telegram. “You’d prefer a fintech you can send, save, and probably do multiple money functions on,” he said. “Why would I p2p here then go and look for my other crypto needs elsewhere.”

Before the presence of crypto exchanges in Nigeria, crypto traders often clustered in messaging platforms like WhatsApp to source for crypto deals. Unlike regulated exchanges, trading on these messaging platforms lacks the security of escrow services offered by crypto exchanges, leaving users vulnerable to scams. However, the administrators of these groups often take the place of an escrow. Nigerians are fast returning to this mode of sourcing for deals since the closure of Binance. 

“I used to trade on a supposedly ‘trusted escrow’ group on WhatsApp,” shared a crypto trader who wished to remain anonymous. “Unfortunately, some members who didn’t use escrow got scammed.”

Binance, the embattled exchange

While crypto traders in the country continue to explore workarounds to trading since the ban of their darling exchange, Binance continues to slug it out with the Nigerian government. One of the company’s two executives, who flew into the country to resolve its blocked website, remains in detention, while the other, has reportedly absconded. As a result of the squabble, the exchange discontinued all naira services on its platform.

The Nigerian government has repeatedly suspected Binance of manipulation of forex prices on its platform. The suspicion was confirmed after the government analysed peer-to-peer trading transactions on the platform and found huge buy orders—as much as $1.9 million—for USDT by Nigerian retail traders who never followed through, raising suspicion about an attempt to manipulate prices for personal gain. The report also reviewed that artificial demand for USDT resulted in the naira’s quick drop from $1/₦1,500 to $1/₦1,950.

Before the restriction of its website, Binance placed limits on how much naira could be traded for the USDT, to help salvage the naira after the currency sank to new lows. The exchange also disabled selling USDT altogether and limited buying it to a fixed price of ₦1802. However, the recent report by the CBN claimed that more than 40% of the buy offers came from the same accounts. 

TechCabal reported earlier this week that the Nigerian government had filed tax evasion charges against the company,  and its detained executives, Nadeem Anjarwalla and Tigran Gambary. The government accused Binance of three tax offences: not registering with the tax collection agency, Federal Inland Revenue Service (FIRS), not paying value-added tax (VAT) and company tax, and not filing tax returns. 
Before the tax eversion charges, Binance had put out plans to patch up its relationship with the Nigerian government.

In a statement released on Thursday, March 14, Binance emphasized its commitment to compliance and collaboration with Nigerian authorities, claiming to have assisted Nigerian law enforcement with information needed to investigate financial crimes such as scams, fraud, and money laundering.

Small businesses account for 90% of Africa’s travel industry. However, due to inadequate payment infrastructures, these businesses are unable to receive payments; as a result, they frequently have to use manual payment methods, which reduces the efficiency of their booking systems.

Launched in 2021 by Peter Wachira and Collins Muthinja, Triply helps these travel businesses collect payments and automate their operations. The startup also advertises these businesses on its marketplace to help match the needs of Kenya’s local travel market which is projected to be worth by $749,000 in 2027. 

Kenya’s tourism industry is one of its biggest cash cows for foreign income, earning about $2.13 billion from it in 2022. The East African country also expects an uptick in the number of tourists by 2026—with 2.4 million visitors up from 2.1 million in 2021. With a growing middle class and increasing disposable income, Kenyans are also increasingly exploring their own country. This represents a huge opportunity for Triply. 

*This is a developing story

It was supposed to be a productive morning finalising a crucial project for a client, but the recent internet disruptions in Nigeria had thrown her entire schedule into disarray. Frustrated, Aisha glanced at her phone, the meagre 1Mbps speed a stark reminder of the nationwide struggle.

Aisha is not alone. Across the country, Nigerians are experiencing severe internet disruption after major cuts to the subsea cable of Nigeria’s major internet service provider, MainOne. Businesses are struggling to complete essential banking transactions, remote workers like Aisha are scrambling for alternative internet solutions, and startups are facing lost revenue and project delays.

“We saw almost a 50% drop in the number of customer sign-ups and customer activities during the period,” Adedeji Olowe, CEO of LendSqr, told  TechCabal. 

For Babatunde Akin-Moses, CEO of Sycamore, a peer-to-peer lending platform, the latest internet outage has made it difficult to disburse loans. Banks reliant on Microsoft Azure for critical services faced delays in disbursing loans, as the cloud platform was also affected. Similarly, borrowers were unable to make repayments due to failed debit transactions initiated by the banks.

Other founders who spoke to TechCabal claim that the internet outages have led to project delays and have affected both internal and external communications. 

“We identified tasks that can be completed offline and focused on them, allowing for some level of continued productivity,” Dennis Mary, CEO and founder of Yuki, a web3 startup, told TechCabal.

“I was unable to access the LMS platform for my company’s training,” said Ire, a growth marketer who had tried completing an online course. 

A return to normalcy?

Per Bloomberg, the broken subsea cable is expected to take weeks or months to fix. Ghana’s communication regulator also estimates that repairs would take at least five weeks to complete. 

However, MTN, which holds the largest market share of Nigeria’s telecom market and is the most affected by the outages, has been proactive in taming the outage. The mobile network provider said it is teaming up with ACE and the West Africa undersea cable systems (WACS) to send a dedicated vessel to repair the affected cables. Since then,  TechCabal can confirm that its network service has slightly improved. 

In a message to its customers on Monday, MTN said that it was working towards full restoration of its services. “Please accept our heartfelt apologies for glitches you may still be experiencing with a few services and be assured that work is ongoing towards full restoration,” MTN’s text to its customers read.

While the MTN network has been severely affected, people who spoke to TechCabal said that network reception on Glo—which runs a different submarine cable along the west coast of Africa between Nigeria and the UK—and Airtel have been okay. Several others have explored alternative internet service providers like Tizeti, FiberOne, and Elon Musk’s satellite-based Starlink to hedge against the bad network. 

“I have tried using VPN, but the result was the same, I just had to go to a coworking space,” Shadrach, a web developer told TechCabal.

In February, Bloomberg reported that Uber was considering an equity investment in the company. The new funding round brings Moove’s total fund raised to date to about $460 million—$250 million in equity and $210 million in debt.

Mubadala Investment Company, a sovereign wealth fund that also invested in Moove’s Series A round, also participated in the Series B round. Other investors in the round include The Latest Ventures, AfricInvest, Palm Drive Capital, Triatlum Advisors, and Future Africa. Moove, which currently operates in six countries, will use the new funding to expand to 16 more markets by the end of 2025.

Per TechCrunch, the move signals a push by Uber—which has partnered with several others, including SWVL and Kobo—to secure a reliable stream of drivers for its ride-hailing platform. Moove’s CEO, Ladi Delano, views the move as a validation of Moove’s business model. 

The mobility fintech leader, which offers vehicle financing to ride-hailing and delivery app drivers, has secured a staggering $460 million across equity and debt, bringing its valuation to about  $750 million up from  $550 million.

In February, the company raised $10 million to expand its presence in India after it launched in three cities in the country. In 2023, Moove partnered with Uber to deploy about 25,000 electric vehicles on its ride-sharing platform in India. 

Launched in 2020 by Ladi Delano and Jide Odunsi, Moove tackles low credit access in mobility markets by offering revenue-based car financing to ride-hailing drivers. Customers buy new vehicles with a share of their weekly earnings, and the startup boasts $90 million in annual recurring revenue.

Per TechCrunch, Moove is also considering inking a deal with Bolt to expand its ride-hailing options in its key emerging markets.

However, collecting repayments is a significant problem for these lenders. Some digital lenders shame and harass defaulters, creating a tense and harmful environment for borrowers. 

It has created a market for ethical collection agencies like BFree—who recently raised $2.95 million in funding—and Mwanga, startups that use phone calls and text messages to remind borrowers of their outstanding balance and the consequences of non-payment. Ethical loan collectors—BFree claims to have upped loan recoveries for their clients by 70%—say they treat borrowers respectfully, even in cases of defaults.

But banking experts doubt the effectiveness of ethical methods, particularly when borrowers face financial hardship. 

“There is a significant limit to ethical loan collection in Nigeria, especially for small loans,” said Adedeji Olowe, CEO of Lendsqr. “Lenders are walking a fine line, it’s only at a sizable level that you can manage finance risk. At the bottom, it’s a free for all.” 

The underlying economic realities that push borrowers to default in the first place may mean that repayments are impossible no matter the collection method. “Without addressing these issues, ethical collection may not be enough,” said Adedeji Olowe, CEO of Lendsqr. 

One expert who asked not to be mentioned believes unethical loan recovery methods could be avoided if digital lenders filter through the behavioral data of their borrowers to know their ability to repay. According to him, borrowers with betting or impulsive buying habits can be screened during the loan underwriting process or before they’re given loans. 

While these checks are in place for some digital lenders, ethical collectors might struggle to recover debts because rogue lenders are learning to game the system and exploit loopholes. 

For instance, if borrowers know their salaries will be directly debited within 24 hours, they might be tempted to empty their accounts upon receiving their paychecks, hindering repayment, one expert who asked not to be named told TechCabal. 

Another challenge posed by ethical loan collection for digital lenders is the cost of outsourcing loan recollection to collection-as-a-service startups. These collection-as-a-service startups charge between 10-35% of the loan amount recovered, which digital lenders account for in their interest rates to lenders, bumping it higher than the average interest rate and possibly deterring borrowers from lending or leading to more loan defaults. 
In 2022, the National Information and Technology Development Agency fined Soko Loan ₦10 million for privacy violations, sending a strong message to the industry. While regulatory bodies like NITDA have taken action against unethical loan recovery practices, experts who spoke to TechCabal believe there should be similar consequences for defaulters to make ethical loan collection work in Nigeria.

The exchange detailed its extensive cooperation with Nigerian law enforcement, claiming to have responded to over 626 information requests from Nigerian authorities since 2020, with an average response time of less than 38 hours. This information reportedly assisted investigations into financial crimes such as scams, fraud, and money laundering.

Furthermore, Binance claimed it conducted dedicated training sessions for officials of Nigeria’s Economic and Financial Crimes Commission (EFCC) in August 2023, focusing on cryptocurrency investigations and internal operations. These initiatives, demonstrate Binance’s commitment to fostering collaboration with Nigerian authorities. The company also claims it has been cooperating with the Nigerian Financial Intelligence Unit (NFIU) and the Nigeria Police Force to discuss continuous training initiatives and operational cooperation.

The statement comes against a backdrop of increased scrutiny towards cryptocurrencies by the Nigerian government. Last month, the Nigerian government detained two Binance executives—Tigran Gambrayan, an American citizen and former US federal agent, and Nadeem Anjarwalla, Binance’s Kenya-based regional manager for Africa—who had flown into the country to resolve the exchange’s banned website. 

The arrests stem from the Nigerian government’s crackdown on forex speculation, triggered by the naira’s volatility after the removal of artificial exchange rate controls.

Despite not being a top market for the exchange, Binance acknowledged Nigeria’s burgeoning crypto adoption, ranking second globally according to Chainalysis.

Airtel Money is Airtel Africa’s fastest-growing arm. While Airtel’s 2023 profits plunged by almost 99%—recording $2 million in profits compared with the $523 million it made in 2022—due to currency devaluation, Airtel mobile money recorded a 31.8% revenue growth. 

In 2021, Airtel hinted at a possible public offering for its fintech arm within a few years, after receiving investments from TPG—$200 million—and Mastercard—$100 million—valuing the unit at $2.65 billion.

The telco currently offers its mobile money services in 14 African countries. In Nigeria, it competes with MTN Momo, while it is dwarfed by competition from Kenya’s mobile money giant, M-Pesa.  Last year, it received approval to allow customers to transact up to KES 500,000 ($3,400) up from KES 300,000 ($2,085) which it was previously allowed to do. 

Airtel’s planned mobile money IPO follows a trend of investment in African mobile mobile money providers. Two years after its $100 million investment in Airtel Money, Mastercard acquired a minor stake in MTN’s mobile money arm.

Softcom, a popular Nigerian startup founded in 2007, was once considered the dream workplace. The software development agency threw colourful end-of-year parties and flew employees to South Africa and Dubai on work retreats. It felt like the example of a modern Silicon Valley startup. 

Initially a B2B company, it had prominent clients like Coca-Cola, MTN, and the Nigerian government. However, in 2019, it shifted its focus from its client-side business to building consumer-facing products.

That strategic shift resulted in Eyowo, one of Nigeria’s earliest digital banks. Hailed by many former employees as a game-changer, Eyowo scored an early win as the platform of choice for Tradermoni, a controversial collateral-free government loan to two million small business owners in 2019. 

Five years after that big win, Softcom’s fortunes turned, with three rounds of layoffs, persistent delays in salary payment, and a revocation of Eyowo’s banking licence in 2023. 

Without a banking licence, Eyowo, with its promise of “making life better for everyone,” began scrambling to secure a banking partnership so its customers could get their deposits. While that involved many missed timelines, many customers began accessing their funds this week.  

Eyowo’s cofounders declined to comment on any part of this story. 

Four ex-Softcom employees blamed Eyowo’s troubles on a lack of experience in core banking and the company’s inability to change its strategic thinking to become consumer-facing. 

A glitchy goodbye for Eyowo

“Eyowo’s licence revocation could have been avoided if the startup had hired professionals to handle regulatory compliance,” one person with knowledge of the business said. 

The same person claimed the CBN visited Eyowo to start a conversation and give recommendations months before the licence was withdrawn. TechCabal was unable to verify these claims independently. 

“It was a great product, but it was hard to keep up with the disappointments,” another ex-employee shared.

One such disappointment was that the company’s founders, Yomi Adedeji and Omoseinde Olubayo, neglected payment discussions until the last minute.

As a result, the startup was cut off from its cloud service provider four times for defaulting on payments, leading to service outages. These outages often sent the marketing team into overdrive. “The frequent disruptions eroded trust,” an ex-employee said. 

The company’s management and marketing team also had different growth and marketing strategies perspectives. While the founders preferred sponsoring events, the marketing team argued that these events added little value to the company and starved the team of funds for more effective campaigns. 

In 2021, Eyowo sponsored Marlian Fest, a concert by Nigerian artist Naira Marley and also sponsored Ake Festival, a book and arts festival, one year later. 

“They were waiting for virality, for that one big moment,” one person said of the management’s marketing approach. 

Softcom’s golden age

“It was like a family, It was churchlike,” one former employee of Softcom’s work culture. 

Among former employees, the consensus was that the leadership team was supportive. One-on-one check-ins were the norm, and a flat organisational structure contributed to the sense that the company’s leadership was accessible. 

The company shared some of its yearly profits with employees and sponsored team bonding sessions to Dubai in 2017 and South Africa in 2018. In 2019, Softcom’s best-performing employees were treated to an all-expense-paid Dubai vacation.

“We felt like we were going to change the world,” one former employee said.

Softcom did change the world with its business solutions.

Its enterprise business—which built bespoke websites and applications for top companies—was its cash cow. 

Through its Useforms app, a software with similar capabilities to Google Forms, the company carried out trade visibility research for MTN. Softcom also made learning management systems for Covenant University, National Open University, and Delta State University.

The company also catered to FMCG companies, offering services like the “Eyowo rewards”—a raffle draw system that let customers win cash prizes by dialing customized USSD codes. One employee claims one of those contracts with Coca-Cola was worth ₦850 million *($578,584), and another with Honeywell was worth ₦65 million. TechCabal was unable to independently verify those figures. 

Softcom’s most lucrative deals were from government contracts, two former employees claimed. It built a website for the Consumer Protection Commission (CPC) and was involved with Npower, a government-backed empowerment scheme to solve youth unemployment. 

But things changed quickly when the startup lost N-power as a client. The loss of that contract may have convinced Softcom to focus on Eyowo as its next lucrative venture. In 2020 the company began a restructuring process that included a downsizing of its workforce in preparation for Eyowo X, the new and consumer-facing iteration of its fintech app.

The complexities of a consumer-focused fintech

This shift from being a software maker to a B2C fintech startup required a change in strategy. Softcom’s previous business model required less customer interaction and focus on scaling. 

But Eyowo operated in a different landscape that demanded frequent customer engagement. But both founders approached Eyowo with the Softcom mindset, leading to a chain of questionable decisions and unrealistic expectations, two persons familiar with the company said.

“They should have treated Eyowo as a separate product without shuttering Softcom,” one former employee said. 

Alongside Eyowo X, it launched three other products: Kwik Sell, an inventory and stock management software, Usepass, an event management and ticketing system, and Useforms, a software with similar capabilities to Google Form. 

The company began conversations to raise $10 million for all four products in 2021, said sources directly involved. Ultimately, those fundraising conversations were unsuccessful.

As Eyowo struggled to raise funds, it was burning through monies it had earned from the Softcom era and it soon ran into cash flow problems.

“Former employees only began noticing when there were delays in salary payment in December 2021,” one person said. 

Towards the end of 2022, the company laid off about 20% of its 200 employees.

“They didn’t cut costs early enough,”the same person said.

Understanding the cash burn at Eyowo

One of Eyowo’s customer acquisition strategies was giving out free debit cards to its users when it launched. The company received over 17,000 requests for those cards in the first month alone, absorbing costs that most fintechs and banks typically pass on to customers. Eyowo’s transfers were also free.

An employee claims it took almost a year after pausing their software business to build Eyowo and three additional products, with each product having a dedicated team building it, contributing significantly to cash burn. 

Eyowo’s struggles culminated with the revocation of its licence in 2023. While the Central Bank gave broad-ranging reasons why microfinance bank licences could be revoked, a person close to the matter claimed Eyowo’s licence was revoked because it stopped offering loans to customers, contravening a regulatory requirement for microfinance banks. 

The licence revocation meant users could not send or receive money from their accounts. While Eyowo explored a partnership with Providus Bank to allow users to withdraw their funds temporarily, some users had their deposits trapped. One former employee claimed one customer visited Eyowo’s office with a gun demanding his trapped funds. 

This week, Eyowo shared that all customers can now access their deposits, and two people told TechCabal that they have successfully withdrawn their deposits.

What remains up in the air is where Eyowo goes from here. The company insinuated it has regained its licence and there are talks about a possible rebrand as “Entrepreneur Bank.”

Ultimately, while many ex-employees and customers are sympathetic to Eyowo’s cause,  the company could improve its communication, they claim.

For now, the company has begun paying back customers with trapped deposits in the bank. Ex-employees are hoping they also get their back pay next.

Editor’s note: An earlier version of this article stated Softcom was launched in 2017. This has now been corrected.