FG Sues Binance For $81bn Over Alleged Economic Losses In Nigeria

The Federal Government has instituted a lawsuit against Binance Holdings Limited, seeking a staggering $81 billion in compensation over alleged economic losses linked to the cryptocurrency platform’s operations in Nigeria.

The suit, marked FHC/ABJ/CS/1444/2024, was filed at the Federal High Court, Abuja, before Justice Inyang Ekwo on February 11, 2024.

The government claims that Binance deliberately operated in secrecy despite having a substantial economic presence in Nigeria, allegedly violating several financial and tax regulations.

According to reports, the platform’s activities contravened the Companies Income Tax Act, the Federal Inland Revenue Service (Establishment) Act 2007, the Central Bank of Nigeria’s Regulatory Framework for Mobile Money Services, and the Significant Economic Presence (SEP) Order—which mandates foreign companies earning above N25 million annually from digital services in Nigeria to pay tax.

In an affidavit deposed to by Jimada Yusuf, a member of the Special Investigation Team in the Office of the National Security Adviser (ONSA), Binance has been operating in Nigeria for over six years without formal registration.

Yusuf disclosed that Binance executives, Tigran Gambaryan and Nadeem Anjarwalla, admitted in a 2024 meeting with the Securities and Exchange Commission (SEC) that the platform was not registered in the country.

Further details from a letter dated 20th February 2024, reportedly from Binance, indicate that the company had 386,256 active Nigerian users, a trading volume of $21.6 billion, and a net revenue of $35.4 million in 2023 alone.

FG Demands Tax Compliance

The Federal Inland Revenue Service (FIRS), represented by Senior Advocate of Nigeria (SAN), Kanu Agabi, has argued that Binance is liable to corporate income tax in Nigeria and must submit income tax returns for 2022 and 2023.

The FIRS is pressing for a court order compelling Binance to pay $2,001,000,000 in outstanding taxes for the two years, alongside a 10% penalty per year on unpaid taxes.

The agency also demands an annual interest rate of 26.75%, based on the CBN’s lending rate, from 1st January 2023 and 1st January 2024, until full payment is made.

In addition to these tax-related penalties, the FIRS is holding Binance responsible for $79.51 billion in alleged economic losses and N231 million in outstanding levies.

Court Grants Substituted Service

At the latest court proceedings, Justice Inyang Ekwo granted the government’s motion for substituted service on Binance, allowing legal documents to be served via alternative means.

The case has been adjourned to 3rd March 2024 for further hearing.