Binance Exec’s Prison Ordeal Caps a Tough Year for Crypto

This story first appeared in The Guidance newsletter on December 23.

Howdy! Ed here. What a year it’s been for crypto on the regulatory front!

The turmoil began in February, when Nigerian authorities detained two Binance executives, accusing the exchange of undermining the naira, Nigeria’s fiat currency. Binance denied the allegations, but the fallout escalated when Tigran Gambaryan, head of Binance’s financial crime compliance, and colleague Nadeem Anjarwalla were arrested upon arrival to resolve the situation. While Anjarwalla managed to escape custody, Gambaryan was imprisoned for eight months on money laundering charges, despite not holding strategic decision-making authority. His health deteriorated in custody, prompting U.S. officials to intervene, ultimately securing his release in October.

This wasn’t the only legal battle making headlines. In the Netherlands, Alexey Pertsev, a Tornado Cash developer, faced a money laundering conviction for allegedly allowing bad actors to exploit the platform. Pertsev received a five-year prison sentence, while the case continues to stir debates over crypto privacy and the legal accountability of developers. Notably, a U.S. appellate court recently ruled that sanctions shouldn’t apply to smart contracts, potentially influencing global regulatory trends by 2025.

The year also marked intense regulatory scrutiny in the U.S., led by outgoing SEC Chair Gary Gensler. Under his leadership, the SEC aggressively targeted major exchanges like Coinbase, Kraken, and Binance, arguing that most digital assets should be classified as securities. However, with the upcoming shift to a Trump administration and Paul Atkins likely taking over the SEC, the crypto industry hopes for a more favorable regulatory environment.

Globally, attention is turning to the European Union, with its new Markets in Crypto-Assets Regulation law set to shape global standards. Meanwhile, U.S. crypto leaders are optimistic about the country’s entrepreneurial prospects, buoyed by a $200 million campaign spend in the 2024 elections.

Bitgalactic’s Take:
The events of 2023 and 2024 showcase how geopolitical and regulatory dynamics are reshaping the crypto landscape. Gambaryan’s ordeal underscores the risks even compliance-focused leaders face in a fragmented regulatory environment. Developers like Pertsev becoming legal targets also emphasize the precarious line between innovation and liability.

The U.S. appears poised for a pivotal reset. If Atkins aligns with industry expectations, the next SEC era could foster innovation rather than impede it. Bitgalactic believes this is a critical moment for the crypto community to advocate for clear, developer-friendly policies that balance innovation with accountability.

Globally, 2025 could see a divergence in crypto governance: while the EU sets rigorous frameworks, the U.S. might emerge as a hub for innovation. This bifurcation will likely define where capital and talent flow in the years ahead.

Finally, Bitcoin’s narrative as a strategic reserve remains contentious, and Bitgalactic predicts its perceived utility in national reserves will remain speculative. Watch for price volatility tied to policy shifts and public sentiment in the coming months.