- Allegations of financial misconduct against Binance in Nigeria,
- Company accused of trading fiat currencies, money laundering.
- Executive in charge of compliance says lawmakers asked for backhanders.
The federal government of Nigeria has petitioned the country’s high court to compel cryptocurrency company Binance to pay the equivalent of $83.5 billion in unpaid income tax, and for economic losses to the country it suffered due to a run on the national currency, the naira.
Binance and two of its executives are accused of non-compliance with tax regulations, not registering with the Nigerian tax agency (FIRS – the federal inland revenue service), and causing economic damage to the economy. The tax agency and the Financial Crimes Commission also have cases in the court alleging tax evasion, foreign exchange violations, and money laundering.
Documents from the Office of the National Security Adviser (NSA) describe how Binance operated in Nigeria for more than six years without registering with the tax authorities, and that there were nearly 390,000 active users of the platform in the country. The documents state that $21.6 billion has been traded on the cryptocurrency platform in that time.
The NSA claims that the Binance platform was used to illegally trade the Nigerian naira despite not having the authority to trade in fiat currencies, adding that the company has refused to provide any record of its activities over the six years.
FIRS’s lead counsel, Kanu Agabi, informed the court on February 11th that attempts to serve Binance directly had not been successful, and so filed a motion for ‘substituted service’ on the company. No representatives from Binance were present at the court proceedings.
In its suit, the FIRS seeks a “declaration that Binance is liable to pay annual corporate income tax for having a significant economic presence in Nigeria […], Binance and its executives must file income tax returns for 2022 and 2023.” The tax agency has also requested an “order compelling Binance to pay $2.001 billion in taxes for 2022 and 2023, [penalties] including 10% annual interest and a 26.75% CBN lending rate, until the taxes are fully paid. Compensation of $79.51 billion and N231 million for economic losses.”
Binance executives in the spotlight
The executive in charge of financial crime compliance at Binance, Tigran Gambaryan (against whom money laundering charges were dropped in October last year), has posted accusations of bribery and corruption in the Nigerian government via the social media platform formerly known as Twitter.
On 15th February this year, Gambaryan (a US citizen) named two legislators in the government whom he alleges demanded a $150m bribe to make the company’s legal issues in Nigeria disappear. He also alleges that losses the country suffered due to a devaluation in the national currency were caused not by Binance’s activities but by monetary policy in the US.
The latest court filings and the case brought against company executives, which include Mr Gambaryan, are part of attempts by Nigeria to crack down on cryptocurrency exchanges, which it claims are used for financing terrorism and money laundering.
Binance’s Africa regional manager, Nadeem Anjarwalla, escaped from house arrest shortly after he and Mr Gambaryan were charged with money laundering a total of $35.4m. Mr Gambaryan claims he has had little contact with his colleague since he eloped. Mr Anjarwalla is thought to have left the country.
The allegations of corruption have been dismissed by the Nigerian government.
