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The Federal Government of Nigeria has filed a lawsuit against cryptocurrency exchange Binance, demanding a penalty of N79.51 billion and N231 million—equivalent to $81.5 billion—over alleged economic losses caused by its operations in the country.
The Federal Inland Revenue Service (FIRS), in a suit marked FHC/ABJ/CS/1444/2024 is also seeking $2.001 billion in income taxes for 2022 and 2023.
The lawsuit accuses Binance and two of its executives, Tigran Gambaryan and Nadeem Anjarwalla, of violating Nigerian laws by failing to register with the FIRS for tax compliance and allegedly contributing to financial losses within the country.
This latest lawsuit marks the third legal battle against Binance in Nigeria. Previously, both the FIRS and the Economic and Financial Crimes Commission (EFCC) had accused the platform of tax evasion, money laundering, and foreign exchange violations in cases before Justice Emeka Nwite of the Federal High Court in Abuja.
Allegations Against Binance
The monetary claims in the lawsuit include:
- A 10% penalty for non-payment of taxes for 2022 and 2023.
- A 26.75% interest rate, based on the Central Bank of Nigeria’s (CBN) prevailing lending rate, applied annually from January 1, 2023, and January 1, 2024.
- Additional penalties for economic damages.
The FIRS also alleges that Binance concealed its business activities in Nigeria despite maintaining a significant economic presence. The government accuses the company of violating multiple regulations, including:
- Companies Income Tax Act
- FIRS (Establishment) Act 2007
- CBN Regulatory Framework for Mobile Money Services
- CIT Significant Economic Presence (SEP) Order, signed by former Finance Minister Zainab Ahmed in May 2020
The SEP Order mandates that foreign companies earning at least N25 million annually from digital services in Nigeria must pay taxes.
Government’s Case Against Binance
An affidavit filed by Jimada Yusuf, a member of the Special Investigation Team from the Office of the National Security Adviser (NSA), reveals that Binance has operated in Nigeria for over six years without proper registration.
During a 2024 meeting with the Securities and Exchange Commission (SEC), Binance executives Anjarwalla and Gambaryan admitted that:
- The platform had 386,256 active Nigerian users in 2023.
- Binance recorded a trading volume of $21.6 billion in Nigeria.
- The company’s net revenue from Nigeria was $35.4 million in 2023.
The affidavit further alleges that Binance:
- Operated without necessary licenses and permits.
- Failed to comply with the Money Laundering Act.
- Provided unauthorized financial services and currency speculation.
- Continued to trade the Nigerian Naira despite claiming to have delisted it.
- Refused to provide six years’ worth of business records, despite a Federal High Court order.
Court Proceedings and Next Steps
The FIRS, represented by lead counsel Kanu Agabi, SAN, was present when the case was called before Justice Inyang Ekwo on February 11, 2025. However, Binance’s legal team was absent.
Agabi informed the court that attempts to serve Binance directly had been unsuccessful, prompting a motion for substituted service. Justice Ekwo granted the request and ordered that service be carried out within seven days, with the next hearing scheduled for March 3, 2025.
FIRS’ Demands in the Suit
The FIRS is asking the court to:
- Declare Binance liable for corporate income tax due to its significant economic presence.
- Mandate Binance and its executives to file tax returns for 2022 and 2023.
- Compel Binance to pay $2.001 billion in unpaid taxes.
- Enforce penalties, including a 10% interest rate per year and CBN’s 26.75% lending rate until full payment.
- Award $79.51 billion and N231 million in damages for economic losses.
Binance’s Response and Government’s Reaction
This lawsuit comes just days after Tigran Gambaryan, one of Binance’s detained executives, accused Nigerian NSA Nuhu Ribadu and lawmakers of bribery and corruption in a statement on X (formerly Twitter).
The Nigerian government dismissed these allegations, labeling them misinformation and defamatory.
Notably, in October 2024, the government dropped money laundering charges against Gambaryan, an executive of Binance Holdings Limited.
The case is set to continue on March 3, 2025.
