- Binance is facing three court cases in Nigeria.
- The government wants to fine Binance $81 billion.
- Erratic court proceedings have marred the trials.
Binance’s legal morass in Nigeria is far from over.
Last month, Nigeria’s government asked a federal judge to levy an $81 billion fine on Binance for allegedly harming the country’s economy.
That’s in addition to two separate criminal cases ― one for money laundering and another for tax evasion ― brought against the crypto exchange last year.
Binance has denied the charges and pleaded not guilty in the money laundering and tax cases; it has not commented on the $81 billion matter.
Even though Nigerian officials appeared keen on conducting trials as quickly as possible, the cases have been caught in the slow grind of the nation’s opaque legal system.
Scheduling conflicts and procedural mishaps have slowed the process down to a crawl.
Meanwhile, Nigeria’s once buoyant crypto market has diminished.
The country’s stablecoin volume shrunk 38% last year as the government’s clampdown on peer-to-peer trading restricted access to dollar-pegged stablecoins.
Even Nigerian airdrop farmers are complaining. Many of them earned $50 daily on Binance rewards. That’s the equivalent of 75,000 Nigerian naira, more than the country’s minimum wage. Earlier this month, Binance barred Nigerians from its airdrop portal.
Here’s a rundown of the three legal actions Binance is facing in Nigeria:
The economic distortion case
$81 billion. That is an awfully big number.
The penalty is almost 19 times greater than the $4.3 billion settlement with the US against Binance in 2023 for violating banking laws.
It’s the equivalent of a quarter of Nigeria’s GDP.
And yet Nigeria’s tax agency, the Federal Inland Revenue Service, or FIRS, said Binance deprived it of this amount by servicing customers without a proper licence.
Officials said the exchange had a “significant economic presence” in the country even though it was a digital-only operation with no physical location, according to court documents seen by DL News.
By not registering and paying taxes during that period, the FIRS said Binance harmed the country’s economy.
The agency demanded that Binance pay $2 billion in back taxes for the six years it operated in Nigeria, plus an additional $79 billion fine for alleged economic losses.
Nigerian prosecutors say they applied the country’s variable monthly lending rate and an additional 10% annual company income tax to Binance’s revenue in Nigeria to arrive at the tax fine.
However, the authorities only claimed to have Binance’s revenue figures in Nigeria for 2023 ― $35.4 million, court filings show.
There was supposed to be a hearing on March 3 to determine if the matter would go to trial.
But the presiding judge went on recess, and the hearing has been pushed to April 7, a week before the court goes on holiday until May.
The money laundering case
Binance’s trouble in Nigeria started when the central bank and finance and justice ministers blamed the exchange for tanking the naira, the nation’s fiat currency.
In February 2024, Nigeria’s state security department detained two executives who arrived in Abuja to hold talks with officials: Tigran Gambaryan, the US-based head of Binance’s financial crimes unit, and Nadeem Anjarwalla, a British lawyer and regional manager based in Nairobi.
Anjarwalla managed to elude his guards and escape Nigeria in March, but Gambaryan was imprisoned, and Nigeria’s Economic and Financial Crimes Commission, or EFCC, put him on trial for money laundering alongside his employer, Binance, despite his deteriorating health.
In October, the Biden administration persuaded Nigeria to release Gambaryan on humanitarian grounds, and the charges were dropped.
Yet the EFCC is still alleging that Binance illegally laundered $35.4 million for illicit actors.
The trial was supposed to resume in February but has since stalled with no updates from the courts.
The tax evasion case
Last April, the FIRS charged Binance with tax evasion in tandem with the EFCC’s money laundering case.
The case seemingly took a backseat to the money laundering trial.
Proceedings finally began last month as the FIRS called its first witness, Mbami Shomgwan, who heads the agency’s electronic tax monitoring system.
The presiding judge, Justice Emeka Nwite, adjourned the case until April 11.
Osato Avan-Nomayo is our Nigeria-based DeFi correspondent. He covers DeFi and tech. Got a tip? please contact him at osato@dlnews.com.
