FG Sues Binance for $81B Over Alleged Economic Losses and Tax Evasion

The federal government is demanding $81 billion in compensation from Binance Holdings Limited, citing alleged economic losses attributed to the company’s activities in Nigeria.

According to Nairametrics, the federal government accused Binance of deliberately operating in secrecy despite having a significant economic presence in Nigeria.

The lawsuit, filed under case number FHC/ABJ/CS/1444/2024, was submitted to Justice Inyang Ekwo of the Federal High Court in Abuja on February 11.

The government alleged that Binance violated multiple financial and tax regulations, including 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 applies to foreign companies generating at least N25 million annually from digital services in Nigeria.

In an affidavit filed by Jimada Yusuf, a member of the special investigation team in the Office of the National Security Adviser (ONSA), Binance is accused of operating in Nigeria for over six years without proper registration.

Yusuf stated that Binance executives Tigran Gambaryan and Nadeem Anjarwalla admitted this during a 2024 meeting with the Securities and Exchange Commission (SEC).

He also referenced a letter from Binance dated February 20, 2024, in which the company disclosed having 386,256 active Nigerian users, a trading volume of $21.6 billion, and a net revenue of $35.4 million for the 2023 calendar year.

Representing the Federal Inland Revenue Service (FIRS), lead counsel Kanu Agabi (SAN) argued that Binance is obligated to pay corporate income tax in Nigeria and must file tax returns for 2022 and 2023.

The agency is requesting a court order compelling Binance to pay $2.001 billion in outstanding taxes for the two years, along with a 10 percent annual penalty on unpaid amounts.

The FIRS is also seeking an annual interest rate of 26.75 percent on the outstanding tax payments, based on the Central Bank of Nigeria’s lending rate, starting from January 1, 2023, and January 1, 2024, respectively, until the full amount is settled. Additionally, the agency is holding Binance liable for economic losses totaling $79.51 billion and N231 million.

During the latest court session, Justice Inyang Ekwo approved a motion for substituted service on Binance, permitting legal documents to be delivered through alternative means. The case has been adjourned to March 3.