Nigeria’s anti-corruption watchdog, the Economic and Financial Crimes Commission (EFCC) accused Binance and Gambrayan of money laundering and foreign exchange manipulation. The crypto exchange also faces four-count tax evasion charges filed by the Federal Internal Revenue Service (FIRS). Last week, the court adjourned both cases, citing the failure of the two agencies to inform the company before arraignment.

Gambaryan, who appeared before Justice Emeka Nwite of the Abuja Division of the Federal High Court on Monday, pleaded not guilty to all four counts of money laundering, the News Agency of Nigeria reported.

Nwite dismissed Gambaryan’s appeal to be served without the charges of his escaped colleague, Nadeem Anjarwalla, Binance’s regional manager for Africa, who fled the country on March 22. 

Gambaryan will be remanded in Kuje Correctional Centre, pending the determination of his bail application on April 18.

The judge adjourned the case to May 5 for commencement of trial. 

Gambaryan and Anjarwalla were arrested and detained in February after flying into the country to resolve the company’s restricted website access—which the government blocked on suspicion of manipulating FX prices in unofficial markets. Binance’s regulatory woes in Nigeria are in connection with a push by the government to halt speculation on forex trading, following volatility in the price of the naira.

In a statement last week, Binance asked Nigerian authorities to release its detained official, saying he “has no decision-making power in the company and should not be held responsible while discussions are ongoing between Binance and the Nigerian government.” Both executives filed a human rights violation case in the Federal High Court, demanding their release, the return of their passports, and a public apology.

According to its website, ARA is the Kenyan agency that identifies, traces, freezes, seizes, confiscates, and recovers proceeds of crime in the East African country. In July 2022, the agency filed two separate suits, leading to the freezing of Kora’s account alongside those of Kandon Technologies Limited, another Nigerian fintech company, by a Kenyan High Court on July 14th. 

The two Techstars-backed companies were alleged to be siphoning Sh6 billion (~$51 million) into Kenya. As such, per the order delivered by Lady Justice Esther Maina, the court froze $249,990 (Sh29.5 million) in Kora’s Equity Bank account, and $126,841 (Sh15 million) in Kandon Technologies Ltd’s two UBA’s accounts. ARA also allegedly linked them with five other Nigerian companies and a Kenyan businessman—Flutterwave Ltd, Elivalat Fintech Ltd, Hupesi Solutions, Boxtrip Travels and Tours, Bagtrip Travels Ltd, Cruz Ride Auto Ltd, and businessman Simon Karanja—whose combined 62 bank accounts containing over Sh6 billion have been frozen over similar allegations. Flutterwave’s CEO has since denied the allegation and instead dismissed them as politically motivated to target Nigerian firms close to Kenya’s election. 

According to the July 14 ruling, both Kora and Kandon would not be able to operate the frozen accounts for six months, until ARA completed its investigations. But now, barely four months later, it appears the case has been settled, according to two documents seen by TechCabal.

In one court document, which was drawn and filed on the 19th of October 2022 by state counsel Stephen Githinji on behalf of the ARA director, the agency said that it has withdrawn its lawsuit in its entirety.

In another document issued by the Directorate of Criminal Investigation (DCI) on September 11, and addressed to Wetangula, Adan & Company Advocates, Kora’s Kenyan solicitor, the agency said there’s currently no evidence to prove the payment company guilty of money laundering or card fraud. 

Speaking on this development, Gideon Orovwiroro, Kora’s Chief Operations Officer, said, in a statement shared with TechCabal, that Kora has maintained its innocence since the news broke. On July 15, the day after the court ordered its account to be frozen, Kora released a statement to debunk all the allegations levied against it.

“We are confident that the Kenyan courts will come to see that the accusations against us are not only wholly baseless but borderline malicious,” Kora’s July 15 statement read. “As part of the capital requirements from the Central Bank of Kenya (CBK) for obtaining a payment service provider and remittance operator license (PDF Pg. 720), Kora deposited the sum of $250,000 in its freshly opened bank account. In line with CBK requirements, this amount was left untouched pending the granting of our license.” 

Per the issue of licensing, DCI advised Kora to liaise with the regulatory authorities in order to obtain the necessary licenses if it wishes to carry out business in Kenya. DCI stated this in the conclusion of its document ratifying Kora. “Our primary work in Kenya till date has been applying to get licenses to operate as a payment and remittance services provider,” Orovwiroro told TechCabal over an email. “We will continue to work on that.” 

But acquiring financial services licenses in Kenya seems to be a hard nut to crack. Despite fulfilling CBK’s deposit requirements, Kora still hasn’t been awarded a license, and other fintech companies face the same reality. Recently, Flutterwave and Chipper Cash, two out of Africa’s seven unicorns, were axed from processing payments in the country due to a lack of the required licenses. 

However, in a positive turn of events, Paystack, another Nigerian payment startup, acquired the seemingly elusive payment service provider license from the CBK in November. This development is expected to ease the process for others, or at least boost their confidence to apply for a license in the future.

Orovwiroro also told TechCabal that the allegation had zero impact on Kora’s business. According to him, despite the back-and-forth, the company acknowledges the potential Kenya presents to their mission of making it easy for global businesses to accept payments in Africa, and for African businesses to accept global payments. “We are launching multi-currency bank account products for African businesses. This will empower merchants to have bank accounts in GBP, EUR, USD and other in-demand currencies,” he concluded.

The firm, Ping Express, admitted in US district court filings that it broke money laundering rules after it transferred $167 million out of the US. One hundred and sixty million dollars of that money was sent to Nigeria over a period of 3 years, some of which were proceeds from online romance scams. 

According to a statement released by US Attorney for the Northern District of Texas, Chad E. Meacham, the firm admitted it failed to maintain an effective anti-money laundering programme and operated without a licence in at least 5 US states.

Ping Express CEO Anslem Oshionebo, 45, and COO Opeyemi Ode, 43, both recently received 27-month prison sentences, and the company’s business manager, Aleoghena Okhumale, received a 42-month prison sentence for intentionally transferring criminal proceeds. 

According to Bloomberg, Oshionebo, a former senior manager at PwC, said in an email that he did not have the resources to continue fighting the case and “history will be the best judge”. On his part, COO Odeyale claimed the case against him had “gross violations”. 

According to the US Department of Justice (DoJ), Ping’s anti-money laundering policy claimed it limited first-time customer transactions to $499, daily transactions to $3,000, and monthly transactions to $4,500. The company admitted in court filings that it “allowed more than 1,500 customers to violate these rules. In one instance, Ping allowed a customer to remit more than $80,000 in a single month—17 times more than the purported limit,” read part of the statement.

Ping Express also admitted it failed to seek sufficient details about the sources or purposes of the funds it helped to transmit, or the customers initiating the transmissions. By law, the company was supposed to report any suspicious transactions to regulators. But according to the company’s court filings, it failed to make a single anti-money laundering report in 3 years of operation.

According to DoJ statements, Collins Orogun, one of Ping’s top customers and a co-defendant in the case, admitted to receiving a fee for laundering money for “romance scam” fraudsters and other criminals. Over a period of 2 years, the DoJ says he received more than $1.3 million in cash, cashier’s cheques, and wires into several US bank accounts he controlled, and then quickly moved more than $1 million of the funds to Africa through Ping.

In one incident, an Indiana woman wired $15,000 to “Carson Jacks”, a putative oil roughneck in the Gulf of Mexico she fell in love with online, after he claimed to have malaria. Another Indiana woman claimed to have fallen in love online with an Irish ship captain named “Thomas Ken” and wired him $6,300 to fix his ship. Orogun facilitated both payments through Ping.

Orogun now faces up to 20 years in federal prison when sentenced on January 23, 2023. 

Ping Express itself faces up to 5 years of probation and a $500,000 fine.

Ping COO Odeyale also founded a UK-registered electronic money firm, Payzen Limited, formerly Clicks FX Limited in 2013. In December 2020, about 10 months after he was formally charged by US DoJ officials for failing to maintain an effective AML programme and operating without a licence, he relinquished his controlling stake in Payzen. The UK business was not mentioned in the US case, but filings on the UK’s Financial Conduct Authority (FCA) website show that Payzen also trades as Ping Express. Per Bloomberg, the current controlling shareholder of Payzen, Adekanmi Adedire, said that his company is “unrelated” to Ping Express, which is a “totally different entity”. However, Payzen’s website on the FCA’s online database is still listed as ping-express.com.

This decision, a result of two suits filed by the country’s Asset Recovery Agency (ARA), accused the companies of availing themselves to be used by fraudsters as a conduit for international money laundering. The court ruling was first reported by The Standard, a Kenyan media outlet. 

The court ruled that funds found in an account belonging to Korapay Technologies Ltd at Equity Bank and two accounts belonging to Kandon Technologies Ltd at UBA should be frozen. The Korapay account is worth $249,565 (Sh29.5 million), and the Kandon accounts are worth a combined $126,841 (Sh15 million).

Korapay Technologies Limited has denied all allegations of money laundering. “We want to make very clear that the allegations from Kenya and the report from Standard KE are baseless and bordering on malicious,” a representative of the company told TechCabal in an email.

In a statement sent to TechCabal, Kora said it “has been dragged through Kenyan courts on empty, unfounded allegations of money laundering since May of 2022.”

Kora, addressing the money laundering allegations in the statement, said that when it expanded its operations to Kenya last year it approached the Central Bank of Kenya (CBK) for a payment and remittance services provider license. 
According to the Kenyan National Payment System Act contained in the country’s National Payment System Regulations 2014 (Kenya Gazette Supplement No. 119 of August 2014, pg 720) and the Money Remittance Regulations 2013, companies seeking to obtain a payment service provider and remittance operators license are required to deposit KSh 5 million and Ksh 20 million respectively in an account. Korapay said it applied to obtain both and was required to deposit Ksh 25 million or about $250,000 in a newly opened bank account. Korapay said this deposit which it left untouched pending the approval of its license is the single transaction it carried out on its account to date.

Korapay, a payment company founded in 2017 by Dickson Nsofor and Bryan Uyanwune, is a Techstars-backed company. Headquartered in Canada, with its major market in Nigeria, Kora expanded to the UK last month and expressed similar ambitions for Kenya and South Africa. In February 2019, the company raised a pre-seed of $120,000, followed by an undisclosed seed in September the same year. 

A representative of Kandon told TechCabal that the company denied all allegations of financial impropriety and expressed is taking necessary legal steps. 

“Every transaction we did in Kenya was fully compliant, we’re working directly with the banks who have carried out KYC on us and are aware of the nature of our transactions and our beneficiaries,” the representative said. “This is an issue that has been ongoing for a while, we have been aware of this issue for months and we’re definitely taking legal actions. I believe we are going to be cleared because we have done nothing wrong, it feels like witch hunting .”  

Kandon, also supported by Techstars, is a liquidity management company and was founded in 2019 by Ayodele Ayowole. It was registered two years ago in Canada and its subsidiary in Kenya was launched in February last year. 

Investigations into the money laundering allegations are ongoing, and the court’s ruling of a six-month freeze on accounts belonging to Korapay and Kandon is expected to aid ARA in completing its investigations. ARA told the court that its findings revealed Korapay and Kandon’s involvement in an international ring of fraudsters who move illicit money through Kenyan banks. 

The agency has also labelled these Nigerian companies as shell companies, incorporated in Kenya to take advantage of the country’s lightly regulated financial system to launder illicit funds. 

Between October 2021 and April this year, Kandon Technologies Ltd siphoned $46 million (Sh5.5 billion) through its UBA bank account before it could act, the agency claimed. “Our investigations revealed that their account had transacted Sh5.5 billion in seven months and by the time we got intelligence information that they were engaged in money laundering, they had transferred the funds to other jurisdictions with only Sh15 million remaining,” the Standard reported the ARA as saying.

Korapay’s receipt of Sh29.5 million in a single transaction triggered the ARA’s investigation into the company. This is after the agency claimed to have established the mode of operation which saw Kandon receive huge funds from the diaspora before hurriedly moving to other bank accounts to hide the source of the suspected illicit funds. According to ARA, Korapay and Kondan are linked to 7 other Nigerian firms: Flutterwave Ltd, Elivalat Fintech Ltd, Hupesi Solutions, Adguru Technology Limited, Boxtrip Travels and Tours, Bagtrip Travels Ltd, Cruz Ride Auto Ltd; and a Kenyan businessman, Simon Karanja whose accounts with over Sh6 billion were frozen last week over money laundering allegations.

UPDATED

This story was updated to add Korapay’s latest statement on the allegations levelled against it.