Nigeria Sues Binance for $81.5 Billion in Economic Losses and Unpaid Taxes
In a dramatic escalation in Nigeria’s ongoing crypto regulatory saga, the Federal Inland Revenue Service (FIRS) has initiated legal proceedings against Binance—arguing that the world’s largest cryptocurrency exchange has caused an estimated $81.5 billion in economic losses and accumulated unpaid taxes. The FIRS contends that Binance’s “significant economic presence” in Nigeria makes the company liable for corporate income taxes, and is now seeking a court ruling that mandates the payment of taxes for the fiscal years 2022 and 2023. In addition to these tax liabilities, the agency is demanding a 10% annual penalty on outstanding amounts along with a 26.75% interest rate on the unpaid taxes, calculated based on the Central Bank of Nigeria’s lending rate.
Read also: Binance Official Accuses Nigerian Lawmakers of Demanding $150 Million Bribe
Background: A Regulatory Crackdown in Nigeria
Nigeria has been at the forefront of a vigorous crackdown on crypto platforms since 2024, a period marked by heightened scrutiny and enforcement actions. During this time, key Binance officials—including Tigran Gambaryan, head of financial crime, and Nadeem Anjarwalla, then head of Binance Africa—were detained by Nigerian authorities. The government accused Binance of facilitating money laundering and undermining the stability of the local currency, the Naira, by providing preferred channels for trading it. Although Binance is not registered in Nigeria, the firm’s extensive operations in the country have drawn regulatory ire.
Details of the FIRS Lawsuit
The FIRS asserts that Binance’s operations in Nigeria have generated substantial economic impact, thereby obliging the exchange to comply with local tax laws. The lawsuit seeks to enforce the payment of corporate income taxes for 2022 and 2023. To penalize non-compliance, FIRS is demanding a 10% annual penalty on any unpaid tax amounts in addition to a steep 26.75% interest rate, reflective of the Central Bank of Nigeria’s lending rate. These punitive measures underscore the government’s commitment to holding crypto exchanges accountable for their economic footprint in Nigeria.
Allegations of Tax Evasion
Nigerian authorities have leveled a series of tax evasion charges against Binance. These include allegations of non-payment of value-added tax (VAT) and corporate income tax, failure to file necessary tax returns, and facilitating tax evasion by enabling customers to circumvent tax obligations via the Binance platform. These allegations follow the broader government crackdown on the crypto industry, which has sought to address what officials describe as systemic regulatory and fiscal deficiencies in the sector.
Binance’s Response and Stance
Binance has strongly refuted the FIRS allegations. CEO Richard Teng and Tigran Gambaryan have publicly dismissed claims that the exchange is responsible for Nigeria’s currency challenges. In his latest post on X (formerly Twitter), Gambaryan decried the accusations as baseless and politically motivated. Despite the ongoing legal dispute, Binance maintains that it is fully cooperating with the FIRS to resolve any potential past tax liabilities. Notably, in March 2024, Binance announced that it had ceased all transactions and trading in the Naira, a move aimed at mitigating regulatory risks amid mounting scrutiny.
Implications for Nigeria’s Economy and the Crypto Industry
The FIRS lawsuit represents a significant development in Nigeria’s efforts to regulate the crypto industry. Nigerian authorities argue that platforms like Binance contribute to capital flight and exacerbate challenges with the national currency, thereby inflicting severe economic damage. If the court rules in favor of the FIRS, the decision could set a precedent for taxing digital asset operations in emerging markets, forcing global crypto exchanges to reexamine their compliance strategies in jurisdictions where they have a measurable economic impact.
For Binance, the legal battle adds yet another layer of complexity to its operations in Africa. Beyond the tax evasion charges, the company is also confronting separate money laundering allegations from an anti-graft agency—claims which it has consistently denied. The outcome of this lawsuit could have far-reaching implications, not only for Binance but also for the future regulatory framework governing the crypto industry in Nigeria and potentially other emerging economies.
Looking Ahead
As the case unfolds, all eyes will be on the Nigerian courts and regulatory authorities. The ruling could redefine how crypto exchanges are held accountable for their economic activities in markets where they operate without formal registration. For stakeholders in the crypto space—investors, policymakers, and industry players alike—the outcome of this lawsuit will be a critical indicator of how digital asset taxation and regulation might evolve in the coming years.
TawkCrypto will continue to monitor this developing story and provide you with comprehensive updates and insights as new information emerges. Stay tuned as we delve deeper into the intersection of crypto regulation, taxation, and economic policy in Nigeria and beyond.
