The $81.5 billion price tag for Binance in Nigeria

Massive tax and damage claims

Binance Holdings Limited faces an $81.5 billion claim from the Federal Inland Revenue Service (FIRS). This total includes $79.51 billion for economic damages and $2 billion in unpaid taxes from 2022 and 2023. The FIRS also seeks 26.75% interest on those overdue taxes along with a 10% annual penalty on unpaid amounts. Jimada Yusuf of the Office of the National Security Adviser submitted an affidavit stating Binance operated in Nigeria for over six years without proper registration. Binance generated $35.4 million in net revenue in 2023 and saw $21.6 billion in trading volume from 386,256 active Nigerian users. The lawsuit filed by the Federal Inland Revenue Service (FIRS) demands $79.51 billion in damages for economic losses and $2 billion in back taxes for the specific Nigerian fiscal years of 2022 and 2023. I see no path for Binance to avoid these penalties because the FIRS claims the exchange maintained a significant economic presence in Nigeria while concealing its activities. The government alleges Binance breached the Companies Income Tax Act and the FIRS Establishment Act of 2007. These charges include non-payment of VAT, corporate income tax, and failure to file tax returns. Binance faces additional charges of money laundering and violations of foreign exchange laws brought by the Economic and Financial Crimes Commission. This legal battle marks the third lawsuit before the Federal High Court in Abuja regarding Binance’s Nigerian operations.

Illegal status and executive detention

The Securities and Exchange Commission declared Binance Nigeria Limited’s operations illegal in a June 2023 circular. This regulatory friction follows the detention of Tigran Gambaryan and Nadeem Anjarwalla in February. Anjarwalla, the regional manager for Africa, fled the country using a smuggled passport; he left his colleague Gambaryan in the Kuje Correctional Centre since April. I find the government’s treatment of mid-level employees as political pawns completely unacceptable. Gambaryan, a US citizen and former IRS agent, faced money laundering charges after his detention in February. His family raised concerns about his health, noting that a herniated disc could cause permanent damage. US Ambassador Richard Mills intervened to help secure Gambaryan’s release last October. Binance CEO Richard Teng claimed unknown persons requested a $150 million secret payment in cryptocurrency to resolve the allegations, though the Nigerian government denies this bribery charge. The exchange faces charges of violating the Money Laundering Act and providing unauthorised financial services. You should keep your money away from unregistered platforms if you value your capital.

Compliance friction and account freezes

Binance froze 281 Nigerian personal accounts to comply with international money laundering laws. The exchange suspended all Naira trading activities in March to address local currency instability. I notice Binance spends $300 million annually on compliance. The exchange restricted 17 platforms, including Nigeria-linked entities A7 Nigeria, A7 Africa, and PilotFinance Ltd. These restrictions began in August. This mirrors global actions where Binance previously settled with US authorities for $4.3 billion. The US Treasury previously penalised Binance with $3.4 billion from FinCEN and $968 million from OFAC for failing to prevent transactions with terrorist groups like Hamas, Al Qaeda, and ISIS. The exchange reported that approximately 38% of the frozen accounts were at the request of international law enforcement. Does the platform’s massive compliance budget actually prevent such heavy legal targeting? I recommend staying away from any platform that lacks clear registration with the local securities commission.