Nigeria has sued Binance Holdings Limited at the Federal High Court Abuja seeking an order 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 demands and alleged liabilities include a 10 per cent penalty for non-payment of income tax for 2022 and 2023, a 26.75 per cent 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. This lawsuit marks the third pending litigation by federal government agencies against Binance’s cryptocurrency activities, which have been widely patronized by Nigerians.
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. The affidavit accuses Binance and its executives of multiple infractions of 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 said 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.
