The Federal Government of Nigeria has filed a suit at an Abuja Federal High Court asking the court to compel Binance to pay N79.51 billion and N231 million (about $81.5 billion) as penalties for alleged economic losses caused by its operations in the country.
The Federal Inland Revenue Service (FIRS), the plaintiff, in a charge marked FHC/ABJ/CS/1444/2024, against Binance, asked the court to order the digital payment firm to pay $2.001 billion as income taxes for 2022 and 2023.
The plaintiff, in the lawsuit also accused Binance and two of its executives, Tigran Gambaryan and Nadeem Anjarwalla, of contravening the nation’s fiscal laws, including failing to register with it as the federal revenue for tax compliance and allegedly causing economic losses to the country during the review period.
Before the latest suit, the FIRS and the Economic and Financial Crimes Commission (EFCC) had filed a lawsuit against the firm on tax evasion, money laundering, and foreign exchange (FX) violations before Justice Emeka Nwite of the Federal High Court in Abuja.
- Advertisement -
According to the claims in the lawsuit, the plaintiffs sought a 10% penalty on Binance for non-payment of taxes for 2022 and 2023, a 26.75% interest rate (the prevailing Central Bank of Nigeria lending rate) per annum from January 1, 2023, and January 1, 2024, respectively, among other penalties.
In the latest lawsuit, the revenue agency alleged that the firm failed to fully disclose its business activities in Nigeria, despite having a strong economic presence in the country.
The FIRS, on behalf of the Federal Government, also accused Binance of breaching Nigeria’s Companies Income Tax 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 2020 defines significant economic presence as foreign companies deriving at least N25 million annually from digital services in Nigeria.
An affidavit deposed to by a member of the Special Investigation Team from the Office of the National Security Adviser, Jimada Yusuf, indicated that Binance had been operating in Nigeria for over six years without registration.
Yusuf claimed that during a 2024 meeting with the Securities and Exchange Commission (SEC), the firm’s executives (Anjarwalla and Gambaryan) admitted to having 386,256 active Nigerian users on Binance platform, with a trading volume of $21.6 billion and net revenue of $35.4 million for 2023.
Accordingly, the affidavit also accused Binance of operating without required licences and permits, non-compliance with the Money Laundering Act, offering unauthorised financial services, and providing currency speculation services.
The NSA maintained that Binance unlawfully listed and traded the Nigerian Naira on its platform, even after claiming it had delisted the currency following investigations as well as refused to provide detailed business records spanning six years, despite a Federal High Court order mandating disclosure to FIRS through the EFCC.
During the court hearing, the FIRS, represented by its lead counsel Kanu Agabi, SAN, was present in court on February 11 this year but when the suit was called upon for a hearing before Justice Inyang Ekwo, the Binance’s legal team was absent.
Agabi told the court that attempts to serve Binance directly had been unsuccessful, and he had filed a motion for substituted service on them.
Based on the information from the plaintiff’s lead counsel, Justice Ekwo granted the motion and directed that substituted service be carried out within seven days, following which the case was adjourned to March 3, 2025.
In the suit before the court, FIRS is seeking the following reliefs: “A declaration that Binance is liable to pay annual corporate income tax for having a significant economic presence in Nigeria.
“A declaration that Binance and its executives must file income tax returns for 2022 and 2023. An order compelling Binance to pay $2.001 billion in taxes for 2022 and 2023.
“Penalties, including 10 percent annual interest and a 26.75 percent CBN lending rate, until the taxes are fully paid. Compensation of $79.51 billion and N231 million for economic losses.”
