Nigeria’s FIRS Accuses Binance of Tax Evasion: The Unfolding Legal Battle

Published on:

  • The FIRS has accused Binance of a litany of offences, including failure to pay Value-Added Tax (VAT) and Company Income Tax.
  • The situation took a dramatic turn when Anjarwalla, Binance’s regional manager for Africa, reportedly escaped government custody.
  • The lack of clear regulatory frameworks has left the industry vulnerable to abuse, leading to increased scrutiny from government agencies like the FIRS.

In a recent development that has sent further shockwaves through Nigeria’s financial landscape, the Federal Inland Revenue Service (FIRS) has levelled severe tax evasion charges against Binance, the world’s largest cryptocurrency exchange. The accusations, encompassing four counts of tax non-compliance, have stirred up a contentious legal battle with far-reaching implications.

The FIRS has accused Binance of a litany of offences, including failure to pay Value-Added Tax (VAT), Company Income Tax, neglecting to file tax returns, and allegedly facilitating customer tax evasion.

These charges have escalated tensions between the cryptocurrency giant and Nigerian authorities, prompting the detention of two high-ranking Binance executives, Tigran Gambaryan and Nadeem Anjarwalla, who are directly implicated in the alleged misconduct.

The situation took a dramatic turn when Anjarwalla, Binance’s regional manager for Africa, reportedly escaped from government custody, prompting a joint effort between Nigerian authorities and Interpol to secure his arrest on an international scale.

This escape adds a layer of intrigue to an already complex legal saga, leaving many questions unanswered about Binance’s operations and the extent of its involvement in alleged tax evasion practices.

The tax evasion details

The lawsuit, designated as FHC/ABJ/CR/115/2024, targets Binance with four counts of tax evasion. It lists two senior executives, Tigran Gambaryan and Nadeem Anjarwalla, as second and third defendants alongside the company itself.

Binance faces charges ranging from non-payment of Value-Added Tax (VAT) and Company Income Tax to failing to file tax returns and allegedly aiding customers in tax evasion through its platform.

Moreover, the Federal Government accuses Binance of failing to register with the Federal Inland Revenue Service (FIRS) and violating Nigerian tax regulations.

The lawsuit cites Section 40 of the FIRS Establishment Act 2007 and highlights potential penalties, including imprisonment for defaulting entities. Specific violations include Binance’s alleged failure to issue VAT invoices, impeding tax determination, and subscriber payment.

The Federal Government’s response underscores its commitment to enforcing tax regulations and tackling financial impropriety within the cryptocurrency sector.

A History of Binance in Nigeria

The backdrop to this legal showdown is a history of strained relations between Binance and Nigerian regulatory bodies. Since late 2021, when Nigerians increasingly turned to Binance’s peer-to-peer marketplace for crypto transactions following a Central Bank ban on crypto activity, tensions have simmered.

Matters escalated in June 2023 when Binance disassociated itself from Binance Nigeria Limited (BNL) and issued a ‘cease’ notice. Up to this point, Binance Nigeria Limited operated with the benefit of people associating them with Binance.

By July 2023, the Nigerian Securities and Exchange Commission warned Nigerians about dealing with Binance, citing significant risks associated with its operations.

However, it wasn’t until late February 2024 that the situation reached a boiling point. The Central Bank Governor estimated that $26 billion had flowed through Binance illegally in 2023, raising serious concerns about lost tax revenue.

The detention of Binance executives without formal charges in late February further exacerbated tensions, culminating in Binance’s decision to halt trading with the Nigerian Naira under government pressure in early March 2024.

The subsequent escape of Nadeem Anjarwalla and the FIRS’s filing of tax evasion charges have thrust this legal dispute into the spotlight, underscoring the high stakes involved for both parties.

In response to mounting pressure and scrutiny from Nigerian authorities, Binance is embroiled in a multifaceted legal battle that threatens to undermine its operations in one of Africa’s largest cryptocurrency markets. The charges against Binance and its executives outline a litany of alleged offences, all of which carry severe penalties under Nigerian law.

The FIRS’s decision to pursue legal action against Binance underscores the government’s commitment to enforcing tax regulations and combating financial impropriety within the cryptocurrency sector.

With past legal issues looming large, including a $4.3 billion settlement for violating anti-money laundering laws in the United States, Binance faces an uphill battle to defend its reputation and maintain its foothold in Nigeria’s burgeoning cryptocurrency market. However, the lack of actual regulation is a cause for concern.

Anjarwalla on the run

As the legal proceedings unfold and the international hunt for Nadeem Anjarwalla continues, the outcome of this high-profile case will undoubtedly have far-reaching implications for Binance, Nigerian regulators, and the broader cryptocurrency ecosystem. All eyes remain firmly fixed on the Federal High Court in Abuja as the stage is set for a legal showdown.

The FIRS’s move to charge Binance with tax evasion comes amid growing concerns over Nigeria’s regulation and oversight of cryptocurrency activities. The exponential growth of the cryptocurrency market in recent years has caught the attention of governments worldwide, prompting calls for tighter rules to prevent illicit activities such as money laundering and tax evasion.

Nigeria is a crucial crypto market.

With its large population and significant youth demographic, Nigeria has emerged as a critical market for cryptocurrency adoption. However, the lack of clear regulatory frameworks has left the industry vulnerable to abuse, leading to increased scrutiny from government agencies like the FIRS.

The charges against Binance signal a broader crackdown on cryptocurrency exchanges operating in Nigeria. The FIRS’s decision to detain senior executives and pursue legal action sends a clear message that tax evasion will not be tolerated in the cryptocurrency sector.

It also underscores the government’s efforts to assert its authority and regulate an industry primarily operated in a regulatory grey area.

The escape of Nadeem Anjarwalla has further complicated the situation, raising questions about the efficacy of Nigeria’s law enforcement agencies and their ability to hold individuals and corporations accountable for financial crimes.

The collaboration between Nigerian authorities and Interpol to apprehend Anjarwalla demonstrates the seriousness with which the government approaches this case.

For Binance, the charges of tax evasion represent a significant blow to its reputation and credibility in Nigeria and globally. As the world’s largest cryptocurrency exchange, Binance has faced mounting scrutiny from regulators in various jurisdictions, raising concerns among investors and users about the platform’s compliance with legal and regulatory requirements.

More woes for Binance

The outcome of the legal battle between Binance and the FIRS will likely have far-reaching implications for the cryptocurrency industry in Nigeria and beyond. Binance could face hefty fines and sanctions if found guilty, which could impact its operations and market position.

Despite cryptocurrency lacking legal status in Nigeria, the country is a crucial cryptocurrency market in Africa. Moreover, other cryptocurrency exchanges operating in Nigeria may also come under increased scrutiny, leading to greater regulatory oversight and compliance requirements.

The FIRS’s tax evasion charges against Binance represent a significant escalation in the government’s efforts to regulate the cryptocurrency industry in Nigeria.

The legal battle between Binance and Nigerian authorities underscores the challenges and complexities of controlling a rapidly evolving and decentralized market. As stakeholders await the case’s outcome, the implications for the future of cryptocurrency regulation in Nigeria remain uncertain.


Leave a Reply

Please enter your comment!
Please enter your name here

Kudzai G Changunda
Kudzai G Changunda
Finance guy with a considerable interest in the adoption of web 3.0 technologies in the financial landscape. Both technology and regulation focused but, of course, people first.