Nigeria's Federal Inland Revenue Service (FIRS) has initiated significant legal action against the world's largest cryptocurrency exchange, Binance, by filing tax evasion charges. The suit, designated FHC/ABJ/CR/115/2024, names Binance as the primary defendant, alongside two of its senior executives, Tigran Gambaryan and Nadeem Anjarwalla, who are currently detained by Nigeria's Economic and Financial Crimes Commission (EFCC). Filed in Abuja, the charges encompass four counts of tax evasion, including the non-payment of Value Added Tax (VAT), company income tax, failure to file tax returns, and complicity in assisting customers in evading taxes through its platform.

Furthermore, the Federal Government accuses Binance of operating without proper registration with the FIRS for tax purposes, thereby contravening established tax regulations within the country. A key element of the suit refers to Binance’s alleged failure to collect and remit various categories of taxes to the federation, a requirement stipulated by Section 40 of the FIRS Establishment Act 2007 (amended). This section explicitly outlines penalties, including potential imprisonment, for entities that fail to deduct and remit taxes. The legal document specifically details instances where Binance purportedly violated tax laws, such as not issuing invoices for VAT purposes, which consequently hindered the accurate determination and payment of taxes by its subscribers.

According to Zacch Adedeji, the Executive Chairman of the Federal Inland Revenue Service, any company conducting business exceeding N25 million annually is considered by the Finance Act to be present in Nigeria. He stated that Binance falls into this category and is therefore obligated to pay Company Income Tax (CIT) and to collect and remit Value Added Tax (VAT). Adedeji asserted that Binance’s failure to comply constitutes a breach of Nigerian law, making the company subject to investigation and prosecution.

The legal proceedings unfold against a backdrop of ongoing detention for Binance executives Tigran Gambaryan, who oversees financial crime compliance, and Nadeem Anjarwalla, Binance Africa’s Regional Manager. For three weeks, both individuals had their passports seized and were confined at a government property in Abuja under the custody of the National Security Adviser’s office. Despite being under arrest, they were reportedly afforded certain privileges, including the use of telephones, which Mr. Anjarwalla is believed to have exploited to orchestrate his escape.

In a dramatic turn of events, Nadeem Anjarwalla reportedly escaped from EFCC custody. The 38-year-old British and Kenyan citizen fled last Friday from the Abuja guest house where he was detained. The escape occurred after guards on duty escorted him to a nearby mosque for Ramadan prayers. Following prayers, Anjarwalla was discovered to have escaped. It is believed he flew out of the country using a Middle East airliner, reportedly utilizing a Kenyan passport, despite his British passport being seized by Nigerian authorities upon his arrest. The circumstances surrounding his ability to board an international commercial flight remain unclear.

The detention of the executives and the broader government actions are linked to Nigeria's efforts to curb the free fall of its local currency, the Naira, and followed the country's decision to ban several cryptocurrency trading websites. The two employees appeared in a Federal High Court in Abuja, where lawyers for the EFCC requested a new detention order after the initial one expired on March 12, a request opposed by the Binance executives' legal team. This situation also follows a high court order that mandated Binance to provide comprehensive information, including transaction details and names of all Nigerian users, to the EFCC to aid in investigations into alleged money laundering and terrorism financing. Earlier, the Nigerian government had ordered Binance to disclose its top 100 users in the country and provide six months of transaction history. Notably, the Governor of the Central Bank of Nigeria previously stated that $26 billion from unidentified individuals had passed through Binance Nigeria in the last year. This ongoing legal and regulatory scrutiny in Nigeria mirrors Binance's prior legal challenges, including pleading guilty to flouting anti-money laundering laws in the United States in late 2023, which resulted in a $4.3 billion plea bargain arrangement.