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The Federal Inland Revenue Service (FIRS) has initiated legal proceedings against cryptocurrency exchange Binance, alleging economic losses amounting to $79.5 billion and an additional $2 billion in unpaid taxes for 2022 and 2023. The total claim of $81.5 billion surpasses Binance’s valuation by approximately 31.45%, according to financial estimates.
Legal Accusations Against Binance
A lawsuit filed with the Federal High Court in Abuja accuses Binance of operating in Nigeria without proper registration and failing to adhere to the country’s tax regulations. According to Reuters, FIRS contends that Binance’s activities have resulted in significant financial setbacks for Nigeria, warranting the current legal action.
Binance has previously expressed willingness to engage with Nigerian authorities to resolve any tax obligations. However, the exchange has yet to issue a formal response regarding this latest lawsuit.
Alleged Economic and Tax Violations
The lawsuit asserts that Binance failed to register with FIRS for tax compliance, leading to extensive economic repercussions. A May 2024 assessment by the Central Bank of Nigeria (CBN) estimated that Binance’s operations contributed to approximately $79.5 billion in economic damages over a six-month period.
Jimada Mohammed Yusuf, a member of the Special Investigation Team under the Office of the National Security Adviser, submitted an affidavit highlighting Binance’s liability for these alleged economic losses. He stated that FIRS had assessed Binance’s income tax obligations and issued a demand notice, which the exchange reportedly ignored, resulting in the current legal action.
Regulatory Framework and Compliance Issues
The Nigerian government claims Binance operated within the country without proper authorization despite maintaining a substantial economic presence. The legal filing cites multiple regulatory violations, including breaches of:
- The Companies Income Tax Act
- The Federal Inland Revenue Service (Establishment) Act 2007
- The CBN Regulatory Framework for Mobile Money Services
- The Companies Income Tax Significant Economic Presence Order
These regulations define tax obligations for foreign and non-resident entities providing digital services in Nigeria.
Ongoing Crackdown on Binance and Cryptocurrency Platforms
This lawsuit is part of a broader regulatory crackdown on Binance and the cryptocurrency sector in Nigeria. Earlier in 2024, Nigerian authorities detained two Binance executives as part of intensified enforcement efforts. Additionally, Binance faces four counts of tax evasion and separate money laundering allegations from the country’s anti-corruption agency—charges the company has denied.
Implications for the Cryptocurrency Industry
As legal proceedings unfold, the case is expected to shape the future of cryptocurrency regulation in Nigeria. It could serve as a precedent for stricter compliance measures and taxation policies governing digital asset platforms operating within the country. Industry stakeholders and market participants will be closely monitoring the outcome to assess its impact on the broader crypto ecosystem in Nigeria and beyond.
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