The Federal Inland Revenue Service (FIRS), on behalf of the Nigerian government, has filed a lawsuit at the Federal High Court in Abuja, demanding that Binance Holdings Limited pay $79,514,055,594.40 and N231 million for economic losses allegedly caused by its operations in Nigeria. Additionally, the government is seeking $2,001,000,000 in unpaid income taxes for 2022 and 2023.
These financial claims, obtained exclusively by Nairametrics, include a 10% penalty for non-payment of income tax for 2022 and 2023, as well as a 26.75% annual interest charge—based on the prevailing Central Bank of Nigeria (CBN) lending rate—effective from January 1, 2023, and January 1, 2024, respectively.
Binance, a global cryptocurrency exchange platform, and two of its executives, Tigran Gambaryan and Nadeem Anjarwalla, stand accused of violating Nigerian laws by failing to register with the FIRS for tax compliance and allegedly contributing to significant economic losses.
Alleged Violations and Legal Grounds
The lawsuit asserts that Binance deliberately concealed its business activities despite maintaining a “significant economic presence” in Nigeria. The charges cite violations of the following regulations:
- Nigeria’s Companies Income Tax (CIT) Act
- Federal Inland Revenue Service (Establishment) Act 2007
- CBN Regulatory Framework for Mobile Money Services
- CIT Significant Economic Presence (SEP) Order
The SEP Order, issued in May 2020 by former Minister of Finance, Budget, and National Planning, Zainab Shamsuna Ahmed, establishes taxation criteria for foreign companies engaged in digital services in Nigeria. Under this order, a company is deemed to have a significant economic presence if it generates an annual gross turnover of at least N25 million or its equivalent in foreign currency.
FIRS’s Case Against Binance
According to an affidavit filed by Jimada Mohammed Yusuf, a member of the Special Investigation Team from the Office of the National Security Adviser (NSA), Binance operated in Nigeria for over six years without registration. Yusuf claimed that Binance’s executives, Gambaryan and Anjarwalla, confirmed this during a 2024 meeting with the Securities and Exchange Commission (SEC).
He further stated that in a letter dated February 20, 2024, Binance acknowledged having 386,256 active Nigerian users, with a total trading volume of $21.6 billion and net revenue of $35.4 million in 2023.
Alleged Infractions by Binance
The affidavit accuses Binance and its executives of multiple regulatory violations, including:
- Offering financial services without the necessary licenses
- Operating without required permits
- Non-compliance with the Money Laundering Act
- Providing currency speculation services without authorization
It further alleges that Binance functioned as a Virtual Asset Service Provider (VASP) in Nigeria, offering trading and custodial services without proper registration with regulatory agencies. Additionally, the affidavit claims that Binance unlawfully listed and traded the Nigerian naira on its platform until it was purportedly delisted following an investigation by the NSA.
However, according to the NSA, further investigation revealed that Binance “lied” about removing the naira, as the currency remained accessible on its platform at the time. The affidavit also states that Binance repeatedly refused to provide records of its business activities over six years, despite multiple requests from Nigerian authorities.
“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.
Financial Liabilities and Government’s Legal Demands
A May 2024 analysis by the CBN’s Research Department estimated Binance’s activities had resulted in economic losses of approximately $7,951,405,405,559.44 over six months.
Yusuf stated, “From the infractions committed in Nigeria by the defendants, for engaging in foreign exchange or any other trading instrument, Binance and its executives are liable to the Federal Government for the sum 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 for economic losses caused by their operations in Nigeria.”
Additionally, the FIRS assessed Binance’s income tax liabilities for 2022 and 2023 and served the company with a demand notice. However, Binance has allegedly refused to comply, prompting the lawsuit.
The FIRS, represented by lead counsel Kanu Agabi (SAN), seeks the following reliefs from the court:
- A declaration that Binance is liable to pay corporate income tax in Nigeria due to its significant economic presence.
- A declaration that Binance and its executives must file income tax returns for 2022 and 2023.
- A declaration that Binance is bound by the FIRS’s tax assessment for 2022 and 2023 due to its failure to file self-assessment returns within the statutory period.
- An order compelling Binance to pay $2,001,000,000 in outstanding income taxes for 2022 and 2023.
- An order mandating Binance to pay a 10% per annum penalty on unpaid taxes for 2022 and 2023.
- An order requiring Binance to pay a 26.75% annual interest charge, effective from January 1, 2023, and January 1, 2024, until full payment is made.
- An order compelling Binance to pay $79,514,055,594.40 and N231 million to the Federal Government for economic losses.
Court Proceedings and Next Steps
The lawsuit, filed under case number FHC/ABJ/CS/1444/2024, was presented before Justice Inyang Ekwo of the Federal High Court in Abuja on February 11, 2025. However, Binance and its legal representatives were absent from the proceedings.
Agabi informed the court that attempts to serve Binance directly had failed, leading him to file a motion for substituted service on February 7, 2025. Substituted service allows legal documents to be delivered through alternative means when direct service is unsuccessful.
Justice Ekwo granted the request and ordered that the substituted service be completed within seven days. The case was subsequently adjourned to March 3, 2025.
Meanwhile, Binance is also facing separate charges of tax evasion, money laundering, and foreign exchange violations before Justice Emeka Nwite in a case filed by the FIRS and the EFCC. Binance has denied all allegations.
As the legal proceedings unfold, the outcome of the federal government’s case against Binance could have significant implications for cryptocurrency regulation in Nigeria. Additionally, Binance has faced regulatory fines and enforcement actions in multiple jurisdictions, including the United States.
