Nigeria sues Binance for $81.5 billion, cites economic losses and tax evasion

The Nigerian government has filed another lawsuit against Binance, accusing the exchange of causing economic losses.

It is seeking $79.5 billion in damages and $2 billion in unpaid taxes and interest.

Context: Nigerian officials blame Binance for the steep fall of the naira since late 2023. 

• This was mainly due to Binance’s peer-to-peer platform, where users set exchange rates within a stated threshold with minimal oversight.

The details

• The fresh lawsuit is in addition to ongoing court cases on tax evasion and money laundering charges leveled against Binance. 
• According to Reuters, Nigeria’s taxman, the Federal Inland Revenue Service (FIRS) allege that Binance has a significant economic presence in the country, making it liable to pay taxes. 
• It wants the court to compel the exchange to pay tax arrears for 2022 and 2023, a 10% annual penalty for defaulting and 26.75% interest on the unpaid taxes. 
• However, it remains unclear how the FIRS or the court intends to assess Binance’s actual earnings in Nigeria from 2022 to 2023.

Dive deeper 

• Last year, the governor of the Central Bank of Nigeria, Olayemi Cardoso, alleged that Binance earned $26 billion from Nigeria in 2023 alone. 
• In response, the exchange said that Nigeria had never been such a big market for it. 
• The exchange also mentioned that the total transaction volume on its platform was $21.6 billion in 2023, a figure from which it only charged a small percentage in transaction fees as its profit.  

Key Quote

• Binance wrote: 

“Nigeria has never been a big market for Binance.  The Government has said that we made $26 billion in revenue from Nigeria in 2023.  That is not the case. The $21.6 billion figure is the total transaction volume from 2023.  
 
“To provide an understanding of transaction volume: if a person were to take $1000 and trade it 1000 times, that would represent $1m in transaction volume. Our actual revenue is based on charging a small percentage [as] transaction fee.” 

• Binance denied causing the naira’s decline, attributing it instead to the removal of the currency’s peg.
• It added that the downward spiral of the naira did not stop when it disabled its P2P trading platform in Nigeria, proving that it had nothing to do with it in the first place. 

Before now 

• Nigerian officials began a crackdown on P2P cryptocurrency trading in 2024, believing it was the major cause of the naira’s rapid devaluation at the time. 
• It detained two Binance officials —Tigran Gambaryan and Nadeem Anjarwalla. While Anjarwalla escaped, Gambaryan remained and was charged to court. 
• Following their arrests, the government’s spokesperson, Bayo Onanuga, said the government wanted Binance to pay up to $10 billion in reparations and damages for sabotaging the Nigerian economy. 

“This country recorded massive losses from their operations [because] they allowed people to ... fix the exchange rate arbitrarily. The government is asking them to pay us close to $10 billion in retribution because they messed up our economy in a short time,” Onanuga said. 

• In a bid to placate Nigerian officials, the exchange delisted all trading pairs involving the naira on its platform and disabled its P2P exchange in the country. It also discontinued naira deposits and withdrawals. 
• Gambaryan has since been released and has come out to confirm allegations that Nigerian officials requested a $150 million bribe from Binance to ‘make the problems go away.’ 
• The Nigerian government denies this, and a lawmaker named in the bribery allegation, Philip Agbese, has sued Gambaryan for defamation.