The Federal Government of Nigeria has taken legal action against Binance Holdings Limited, a major global cryptocurrency exchange, seeking $79.51 billion in damages and an additional ₦231 million for alleged economic losses caused by the company’s operations in Nigeria.

The Federal Inland Revenue Service (FIRS) filed the lawsuit at the Federal High Court in Abuja, marking the third lawsuit against Binance currently before the court. FIRS is also demanding $2 billion in income taxes for 2022 and 2023, alleging that Binance violated multiple tax and financial laws.

Allegations Against Binance and Its Executives

The lawsuit, marked FHC/ABJ/CS/1444/2024, lists Binance and two of its executives, Tigran Gambaryan and Nadeem Anjarwalla, as defendants. The Nigerian authorities have accused them of:

• Operating in Nigeria for over six years without registering with the FIRS for tax compliance.
• Engaging in foreign exchange violations, money laundering, and tax evasion.
• Failing to provide required business records spanning six years despite a court order.
• Operating without the necessary licenses and permits to offer financial services.
• Speculating on the Nigerian Naira despite claiming to have delisted the currency after regulatory scrutiny.

Breakdown of Nigeria’s Financial Claims Against Binance

Nigeria’s monetary demands in the lawsuit include:

• $2.001 billion in unpaid taxes for 2022 and 2023.
• A 10% penalty for non-payment of taxes for both years.
• A 26.75% annual interest rate, based on the prevailing Central Bank of Nigeria (CBN) lending rate, from January 1, 2023, and January 1, 2024.
• $79.51 billion in compensation for economic losses allegedly caused by Binance.
• ₦231 million in additional damages.

The lawsuit further accuses Binance of violating Nigeria’s Companies Income Tax Act, the FIRS (Establishment) Act 2007, and CBN’s Regulatory Framework for Mobile Money Services.

Binance’s Significant Economic Presence in Nigeria

According to an affidavit filed by Jimada Yusuf, a member of the Special Investigation Team from the Office of the National Security Adviser (NSA), Binance has been operating in Nigeria since at least 2018, without fulfilling tax obligations.

Yusuf revealed that Binance executives admitted during a 2024 meeting with the Securities and Exchange Commission (SEC) that the platform:

• Had 386,256 active Nigerian users.
• Processed a trading volume of $21.6 billion in 2023 alone.
• Generated $35.4 million in net revenue from Nigeria.

Under the Significant Economic Presence (SEP) Order, signed by former Finance Minister Zainab Ahmed in May 2020, foreign companies earning at least ₦25 million annually from digital services in Nigeria are required to pay corporate income tax.

FIRS argues that Binance met this threshold but failed to comply with tax laws, making it liable for corporate income tax, income tax filings, and financial penalties.

Court Proceedings and Legal Challenges

The FIRS and the Economic and Financial Crimes Commission (EFCC) had previously charged Binance with tax evasion, money laundering, and foreign exchange violations before Justice Emeka Nwite at the Federal High Court in Abuja.

On February 11, 2025, lead counsel for the FIRS, Kanu Agabi (SAN), informed Justice Inyang Ekwo that all attempts to serve Binance with legal documents had failed. As a result, he filed a motion for substituted service, which the court granted, directing that service be completed within seven days.

Binance’s legal team was absent from the hearing, and the case was adjourned to March 3, 2025.

What Nigeria Wants from Binance

The FIRS lawsuit seeks multiple court declarations and financial penalties, including:

1. A declaration that Binance must pay corporate income tax due to its significant economic presence in Nigeria.
2. An order compelling Binance and its executives to file income tax returns for 2022 and 2023.
3. A demand for $2.001 billion in tax payments for the two years in question.
4. Penalties, including 10% annual interest and a 26.75% CBN lending rate on unpaid taxes.
5. A claim of $79.51 billion and ₦231 million in economic losses.

Implications for Binance and Cryptocurrency Regulation in Nigeria

The lawsuit against Binance marks a significant escalation in Nigeria’s crackdown on cryptocurrency trading and digital financial services. Over the past year, authorities have:

• Banned cryptocurrency transactions for commercial banks, restricting financial institutions from processing crypto-related payments.
• Investigated major crypto exchanges, including Binance and KuCoin, for alleged tax and foreign exchange violations.
• Blocked access to Binance’s website, making it difficult for Nigerian users to access the platform.

If Binance loses the lawsuit, it could face massive financial liabilities, regulatory scrutiny, and potential criminal charges against its executives. This case also signals Nigeria’s intent to enforce stricter oversight on digital asset platforms operating within its borders.

What’s Next?

• Binance must respond to the lawsuit and present its defense before the next court hearing on March 3, 2025.
• Nigerian authorities may escalate enforcement actions, including possible criminal prosecution of Binance executives in absentia.
• The cryptocurrency industry in Nigeria will closely watch the case, as its outcome could set a precedent for future regulations on digital assets.

With the Nigerian government pushing for stricter compliance from cryptocurrency exchanges, this lawsuit could be a watershed moment for digital finance in Nigeria. The case’s resolution may reshape how global crypto companies engage with the Nigerian market in the years to come.