The federal government has taken legal action against Binance Holdings Limited, demanding over $79 billion in economic loss compensation and $2 billion in unpaid taxes. The lawsuit, filed by the Federal Inland Revenue Service (FIRS) at the Federal High Court in Abuja, accuses the cryptocurrency exchange of operating illegally in Nigeria and failing to comply with tax laws.
Allegations Against Binance
According to court documents seen by Nairametrics, the FIRS claims Binance operated in Nigeria for over six years without registering for tax compliance. The Nigerian government argues that the company’s activities have caused massive financial damage and violated multiple regulatory laws.
The federal government’s lawsuit seeks:
- $79,514,055,594.40 and N231 million for economic losses allegedly caused by Binance’s operations.
- $2,001,000,000 in income tax liabilities for the years 2022 and 2023.
- A 10% penalty for non-payment of income tax.
- A 26.75% interest rate per annum from January 1, 2023, and January 1, 2024, respectively.
Binance executives Tigran Gambaryan and Nadeem Anjarwalla, who are also named in the lawsuit, allegedly admitted to the company’s extensive presence in Nigeria during a 2024 meeting with the Securities and Exchange Commission (SEC).
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FIRS Investigates Binance’s Activities
Jimada Mohammed Yusuf, a member of the Special Investigation Team from the Office of the National Security Adviser (NSA), provided an affidavit stating that Binance had been secretly operating in Nigeria. He said Binance executives admitted that in 2023 alone, the platform had 386,256 active Nigerian users, with a trading volume of $21.6 billion and net revenue of $35.4 million.
Yusuf’s affidavit accuses Binance of violating multiple financial regulations, including:
- Failing to register with Nigerian authorities.
- Offering financial services without the necessary licenses.
- Operating without required permits.
- Non-compliance with the Money Laundering Act.
- Providing currency speculation services without authorization.
Furthermore, Binance is alleged to have continued listing and trading the Nigerian Naira despite claiming to have stopped. The NSA’s investigations found that Binance “lied” about this claim, stating that the Naira was still available on its platform at the time.
Government’s Financial Assessment
The Central Bank of Nigeria (CBN) conducted an assessment through its Research Department in May 2024, revealing that Binance’s operations caused economic losses amounting to $7.9 trillion over six months. The FIRS argues that Binance’s activities disrupted Nigeria’s financial ecosystem, leading to revenue losses and unauthorized foreign exchange transactions.
Yusuf stated, “From the infractions committed in Nigeria by the defendants, for engaging in foreign exchange or any other trading instrument, Binance and its executives are liable to the Federal Government for the sum of $79,514,055,594.40 and N231 million for economic losses caused by their operations.”
The FIRS also claims that despite being served a demand notice for unpaid income taxes, Binance has refused to comply, leading to the lawsuit.
Legal Demands by the Nigerian Government
Through its lead counsel, Kanu Agabi (SAN), the FIRS is requesting the court to:
- Declare that Binance and its executives have a legal obligation to pay corporate income tax in Nigeria due to their significant economic presence.
- Declare that Binance must file income tax returns for 2022 and 2023.
- Declare that Binance is bound by the FIRS’s income tax assessment for 2022 and 2023 due to its failure to self-assess within the statutory period.
- Order Binance to pay $2,001,000,000 in outstanding income taxes.
- Impose a 10% annual penalty on the unpaid taxes.
- Enforce a 26.75% interest rate per annum on unpaid taxes, effective from January 1, 2023, and January 1, 2024, until full payment is made.
- Order Binance to pay $79,514,055,594.40 and N231 million in compensation for economic losses incurred.
Binance’s Legal Troubles in Nigeria
This case marks the third legal battle Binance is facing in Nigeria over its cryptocurrency operations. The government has intensified its crackdown on crypto trading platforms, citing concerns over financial stability, tax evasion, and money laundering.
Despite Binance’s claims that it has ceased certain activities in Nigeria, the government insists that the company has continued operations in defiance of regulations.
Next Steps in the Legal Battle
The Federal High Court is set to hear the case in the coming weeks. If Binance is found guilty, it could face one of the largest financial penalties ever imposed on a cryptocurrency exchange by a national government.
While Binance has not officially responded to the lawsuit, industry experts predict that the legal battle will have significant implications for Nigeria’s cryptocurrency market and the regulation of digital financial services.
The outcome of this case could set a precedent for how Nigeria and other African nations regulate foreign digital asset companies operating within their borders.