The Nigerian government, through the Federal Inland Revenue Service (FIRS), has asked the Federal High Court in Abuja to order Binance Holdings Limited to pay $79,514,055,594.40 and N231 million for economic losses allegedly caused by its operations in Nigeria, as well as $2,001,000,000 in income tax for 2022 and 2023.
These monetary demands and alleged liabilities, exclusively seen by Nairametrics, include a 10% penalty for non-payment of income tax for 2022 and 2023, a 26.75% interest rate—being the prevailing Central Bank of Nigeria (CBN) lending rate per annum—from January 1, 2023, and January 1, 2024, respectively, among other charges.
Binance, a cryptocurrency exchange platform, along with two of its executives, Tigran Gambaryan and Nadeem Anjarwalla, is accused in this lawsuit of contravening Nigerian laws by failing to register with the FIRS for tax compliance and causing economic losses to the country during the period under review.
The lawsuit alleges that Binance deliberately shrouded its business activities in secrecy despite having a “significant economic presence” in Nigeria.
The violations cited include breaches of Nigeria’s Companies Income Tax (CIT) Act, the Federal Inland Revenue Service (Establishment) Act 2007, the CBN Regulatory Framework for Mobile Money Services, and the CIT Significant Economic Presence (SEP) Order.
The SEP Order, referenced in the lawsuit, sets out conditions under which foreign and non-resident companies providing digital services, among others, become liable for taxation in Nigeria.
The order stipulates that a foreign company has a significant economic presence in Nigeria if it derives an annual gross turnover of at least N25 million or its equivalent in other currencies from digital activities, among other criteria.
The SEP Order was signed by former Minister of Finance, Budget, and National Planning, Mrs. Zainab Shamsuna Ahmed, and gazetted by the federal government in May 2020.
Nairametrics reports that this lawsuit marks the third pending litigation by federal government agencies against Binance’s cryptocurrency activities, which have been widely patronized by Nigerians.
FIRS’s Case
Binance’s alleged significant economic presence in Nigeria
- In an affidavit deposed by Jimada Mohammed Yusuf, a member of the Special Investigation Team from the Office of the National Security Adviser, who investigated Binance’s business activities alongside officials from the FIRS and other regulatory agencies, the federal government discovered that Binance had been operating in Nigeria for over six years without registration.
- According to Yusuf, this was allegedly confirmed by Gambaryan and Anjarwalla during a meeting with the Securities and Exchange Commission (SEC) in 2024.
- He further claimed that in a letter dated February 20, 2024, Binance admitted to having 386,256 active users from Nigeria on its platform, with a trading volume of $21.6 billion and a net revenue of $35.4 million for the calendar year 2023.
Binance’s alleged infractions in Nigeria
The affidavit accuses Binance and its executives of multiple infractions, including:
- Offering financial services without the necessary licenses
- Operating without required permits
- Non-compliance with the Money Laundering Act
- Providing currency speculation services without proper authorization
- The affidavit further states that Binance engaged in Virtual Asset Service Provider (VASP) activities in Nigeria, providing trading and custodial services to Nigerian users without proper registration with the relevant regulatory agencies.
Additionally, the official stated that Binance executives allegedly admitted that the platform had unlawfully listed and traded the Nigerian Naira until it purportedly delisted the currency following an investigation by the Office of the National Security Adviser.
- However, further investigations by the NSA found that Binance “lied” about this claim, as the Naira was still accessible on its platform at the time, the official stated.
- The NSA also claimed that it repeatedly demanded Binance to supply records of its business activities over six years, but the company allegedly refused to comply.
“The defendants refused or neglected to make the complete information available to date (as of the filing of the pending suit in September 2024) despite an order from the Federal High Court mandating them to disclose such information to the FIRS through the Economic and Financial Crimes Commission (EFCC),” Yusuf stated.
Yusuf informed the court that FIRS also has another pending case against Binance over tax evasion.
Alleged financial liability of Binance
- The affidavit states that following Binance’s alleged infractions, the Central Bank of Nigeria (CBN) conducted an analysis through its Research Department in May 2024 to assess the financial penalty for Binance’s activities.
- According to the report, Binance’s activities resulted in estimated economic losses to the Federal Government of Nigeria amounting to $7,951,405,405,559.44 over six months (early 2024).
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 (Seventy-nine billion, five hundred and fourteen million, fifty-five thousand, five hundred and ninety-four dollars, forty cents) and N231 million for economic losses caused by their operations in Nigeria.”
- Additionally, he submitted that the FIRS assessed Binance’s income tax liabilities for both years and duly served the company with a demand notice.
- However, the affidavit claims Binance has refused to pay, leading to the current lawsuit.
FIRS’s Legal Demands
The FIRS, through its lead counsel, Kanu Agabi (SAN), is seeking the following reliefs against Binance and its executives:
- A declaration that the defendants are liable to pay annual corporate income tax to Nigeria for having a significant economic presence in the country.
- A declaration that Binance and its executives (Tigran Gambaryan and Nadeem Anjarwalla) are liable to file income tax returns for 2022 and 2023.
- A declaration that the defendants are bound by the FIRS’s income tax assessment for 2022 and 2023 due to their failure to file self-assessment returns within the statutory period.
- An order compelling Binance to pay $2,001,000,000 in outstanding income taxes for 2022 and 2023.
- An order for Binance to pay an additional 10% per annum penalty on unpaid taxes for 2022 and 2023.
- An order mandating Binance to pay a 26.75% interest rate, based on the prevailing CBN lending rate per annum, from January 1, 2023, and January 1, 2024, respectively, until full payment is made.
- An order compelling Binance to pay $79,514,055,594.40 and N231 million to the Federal Government for economic losses incurred due to its operations in Nigeria.
What We Know
Nairametrics reports that this pending lawsuit, marked FHC/ABJ/CS/1444/2024, was announced before Justice Inyang Ekwo of the Federal High Court in Abuja on February 11, 2025.
- The legal team of Binance and its executives were absent at the proceedings.
- Agabi informed the court that attempts to serve Binance directly had been unsuccessful, and he had filed a motion for substituted service on February 7, 2025.
Substituted service is a legal procedure that allows court documents to be delivered through alternative means when personal service fails.
- Justice Ekwo granted the request, ordering that the substituted service be carried out within seven days.
- The case was then adjourned to March 3, 2025.
- Nairametrics also reports that Binance faces separate charges of tax evasion, money laundering, and foreign exchange violations before Justice Emeka Nwite in a case brought by the FIRS and the EFCC.
- Binance has denied all charges.
As these legal battles unfold, all eyes will be on the courts to determine the outcome of FG’s charges against Binance.
Meanwhile, several other countries, including the United States, have also imposed fines on Binance for regulatory infractions.
