The Nigerian government, represented by the Federal Inland Revenue Service (FIRS), has petitioned the Federal High Court in Abuja to compel Binance Holdings Limited to remit a total of $79,514,055,594.40 and N231 million for alleged economic damages resulting from its operations in Nigeria. Additionally, the government seeks $2,001,000,000 in income tax for the years 2022 and 2023.
These financial claims, which were exclusively reported by Nairametrics, encompass a 10% penalty for the failure to pay income tax for the years in question, as well as a 26.75% interest rate—reflecting the current lending rate set by the Central Bank of Nigeria (CBN)—applicable from January 1, 2023, and January 1, 2024, respectively, along with other associated charges.
Binance, a cryptocurrency exchange platform, along with its executives Tigran Gambaryan and Nadeem Anjarwalla, is accused in this legal action of violating Nigerian laws by not registering with the FIRS for tax compliance, thereby inflicting economic harm on the nation during the specified timeframe.
The lawsuit asserts that Binance intentionally concealed its business operations despite possessing a “significant economic presence” in Nigeria.
The cited violations include infringements of Nigeria’s Companies Income Tax (CIT) Act, the Federal Inland Revenue Service (Establishment) Act of 2007, the CBN Regulatory Framework for Mobile Money Services, and the CIT Significant Economic Presence (SEP) Order.
The SEP Order, mentioned in the lawsuit, outlines the conditions under which foreign and non-resident companies providing digital services become subject to taxation in Nigeria.
According to the order, a foreign entity is deemed to have a significant economic presence in Nigeria if it generates an annual gross turnover of at least N25 million or its equivalent in other currencies from digital activities, among other stipulations.
The SEP Order was enacted by the former Minister of Finance, Budget, and National Planning, Mrs. Zainab Shamsuna Ahmed, and was officially published by the federal government in May 2020.
This lawsuit, as reported, represents the third ongoing legal action initiated by federal government agencies against Binance's cryptocurrency operations, which have garnered significant usage among Nigerians.
In an affidavit submitted by Jimada Mohammed Yusuf, a member of the Special Investigation Team from the Office of the National Security Adviser, it was revealed that Binance has been conducting business in Nigeria for over six years without proper registration. This investigation was carried out in collaboration with officials from the Federal Inland Revenue Service (FIRS) and other regulatory bodies.
Yusuf stated that this information was reportedly corroborated by Gambaryan and Anjarwalla during a meeting with the Securities and Exchange Commission (SEC) in 2024.
Additionally, he noted that in a letter dated February 20, 2024, Binance acknowledged 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 year 2023.
The affidavit charges Binance and its executives with several violations, including:
Providing financial services without the requisite licenses
Conducting operations without the necessary permits
Non-compliance with the Money Laundering Act
Provision of currency speculation services without appropriate authorization
The affidavit further indicates that Binance participated in Virtual Asset Service Provider (VASP) operations in Nigeria, offering trading and custodial services to Nigerian users without the necessary registration with the relevant regulatory authorities.
Moreover, the official noted that Binance executives allegedly acknowledged that the platform had unlawfully listed and traded the Nigerian Naira until it reportedly removed the currency following an inquiry by the Office of the National Security Adviser.
However, subsequent investigations by the NSA revealed that Binance “misrepresented” this assertion, as the Naira remained available on its platform at that time, according to the official.
The NSA also asserted that it had repeatedly requested Binance to provide records of its business operations over a span of six years, but the company allegedly failed to comply.
“The defendants have either refused or neglected to provide the complete information to date (as of the filing of the pending suit in September 2024), despite a directive from the Federal High Court requiring them to disclose such information to the FIRS through the Economic and Financial Crimes Commission (EFCC),” Yusuf stated.
Yusuf informed the court that the FIRS also has another ongoing case against Binance concerning tax evasion.
Alleged financial liability of Binance
The affidavit states that following Binance’s purported violations, the Central Bank of Nigeria (CBN) conducted an analysis through its Research Department in May 2024 to evaluate the financial repercussions of Binance’s activities.
According to the report, Binance’s operations resulted in estimated economic losses to the Federal Government of Nigeria totaling $7,951,405,405,559.44 over a six-month period (early 2024).
Yusuf asserted that, due to the violations committed by the defendants in Nigeria related to foreign exchange and other trading activities, Binance and its executives are accountable to the Federal Government for a total 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, representing economic damages resulting from their operations in Nigeria.
Furthermore, he indicated that the Federal Inland Revenue Service (FIRS) has evaluated Binance's income tax obligations for the past two years and has formally issued a demand notice to the company.
Nevertheless, the affidavit alleges that Binance has failed to fulfill these payment obligations, prompting the current legal action.
The FIRS, represented by its lead counsel, Kanu Agabi (SAN), is pursuing the following reliefs against Binance and its executives:
A declaration affirming that the defendants are obligated to remit annual corporate income tax to Nigeria due to their substantial economic presence in the nation.
A declaration confirming that Binance and its executives, Tigran Gambaryan and Nadeem Anjarwalla, are required to submit income tax returns for the years 2022 and 2023.
A declaration stating that the defendants are subject to the FIRS’s income tax assessments for 2022 and 2023, owing to their failure to file self-assessment returns within the designated timeframe.
An order mandating Binance to remit $2,001,000,000 in overdue income taxes for the years 2022 and 2023.
An order imposing an additional penalty of 10% per annum on the unpaid taxes for the years 2022 and 2023.
An order requiring Binance to pay interest at a rate of 26.75%, based on the current Central Bank of Nigeria lending rate per annum, from January 1, 2023, and January 1, 2024, respectively, until full payment is completed.
An order compelling Binance to pay $79,514,055,594.40 and N231 million to the Federal Government for economic losses incurred as a result of its operations in Nigeria.
This ongoing lawsuit, designated FHC/ABJ/CS/1444/2024, was presented before Justice Inyang Ekwo of the Federal High Court in Abuja on February 11, 2025.
The legal representatives of Binance and its executives were not present during the proceedings.
Agabi informed the court that efforts to serve Binance directly had not been successful, prompting him to file a motion for substituted service on February 7, 2025.
Substituted service is a legal mechanism that permits the delivery of court documents through alternative methods when personal service is not feasible.
Justice Ekwo approved the request, mandating that the substituted service be executed within a seven-day timeframe.
The case was subsequently postponed to March 3, 2025.
Additionally, it has been reported that Binance is facing distinct allegations of tax evasion, money laundering, and violations of foreign exchange regulations before Justice Emeka Nwite, in a case initiated by the FIRS and the EFCC.
Binance has refuted all allegations.
As these legal proceedings progress, the courts will be closely monitored to ascertain the outcome of the federal government's charges against Binance.
In the meantime, several other nations, including the United States, have also levied fines against Binance for regulatory breaches.
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