Nigeria takes legal action against binance, seeking $81.5 Billion in damages and unpaid taxes

Nigeria has initiated legal proceedings against Binance, the world’s largest cryptocurrency exchange, demanding a total of $81.5 billion in compensation for alleged economic damage and unpaid taxes. The lawsuit accuses Binance of significantly contributing to the country’s currency instability and failing to meet its tax obligations, court documents revealed on Wednesday.

Allegations Against Binance

Nigerian authorities claim that Binance played a crucial role in the devaluation of the naira, the country’s local currency, by serving as a primary platform for currency speculation and unregulated crypto trading. In 2024, the Nigerian government detained two Binance executives as part of its broader crackdown on cryptocurrency platforms, which it accuses of exacerbating financial instability.

Despite not being officially registered in Nigeria, Binance has had a substantial impact on the country’s financial ecosystem. The Nigerian Federal Inland Revenue Service (FIRS) argues that Binance has a “significant economic presence” in the country and is, therefore, obligated to pay corporate income taxes. This claim forms a major part of Nigeria’s case against the exchange.

The Nigerian government is demanding $79.5 billion in damages for economic losses and an additional $2 billion in back taxes from Binance. The Federal Inland Revenue Service has outlined its tax demands, which include corporate income tax for 2022 and 2023, a 10% annual penalty on outstanding payments, and a 26.75% interest rate on the unpaid taxes, calculated according to the Central Bank of Nigeria’s lending rate.

This lawsuit follows an earlier set of tax evasion charges filed against Binance, which include:

Non-payment of value-added tax (VAT)

Failure to pay corporate income tax

Non-submission of tax returns

Assisting users in tax evasion through its platform

The case has intensified Nigeria’s scrutiny of the cryptocurrency sector, as regulators seek greater control over digital financial transactions.

While Binance has not yet issued an official response to the latest lawsuit, the company previously stated that it was working with the Nigerian Federal Inland Revenue Service to resolve any historical tax issues. However, Binance has contested the tax evasion charges, maintaining that it complies with local regulations where applicable.

In March 2024, the exchange announced the suspension of all naira-based transactions, effectively ceasing operations related to Nigeria’s currency. The decision came amid growing regulatory pressure and ongoing legal battles with Nigerian authorities.

Beyond tax-related accusations, Binance is also facing separate money laundering charges from Nigeria’s anti-corruption agencies, allegations that the company has strongly denied.

Nigeria’s Crackdown on Cryptocurrency Platforms

Nigeria, one of Africa’s largest economies, has had a complicated relationship with cryptocurrency. While digital assets have gained popularity among Nigerians as an alternative financial system due to inflation and currency devaluation, the government has increasingly viewed cryptocurrency platforms as a threat to economic stability.

In recent years, the Central Bank of Nigeria has implemented various measures to curb cryptocurrency transactions, including banning banks from facilitating crypto-related activities. However, despite these restrictions, peer-to-peer (P2P) crypto trading has continued to flourish, with platforms like Binance becoming essential tools for users seeking alternative financial solutions.

Implications of the Lawsuit

The outcome of this case could have significant consequences for both Binance and Nigeria’s broader cryptocurrency landscape. If Binance is found liable for the alleged economic damage and tax evasion, it may face severe financial penalties and stricter regulatory scrutiny in other markets. Additionally, the lawsuit signals Nigeria’s increasing determination to regulate digital financial transactions and hold global crypto firms accountable for their operations within its borders.

For the Nigerian government, this legal battle represents an effort to reassert control over the financial sector and mitigate the impact of unregulated cryptocurrency activities on the national economy. However, critics argue that overly aggressive crackdowns on crypto platforms could drive financial innovation underground, potentially worsening the challenges authorities are trying to address.

Nigeria’s lawsuit against Binance marks a significant moment in the country’s approach to cryptocurrency regulation. As the case unfolds, it will be closely watched by governments, financial regulators, and crypto enthusiasts worldwide. Whether this legal action leads to tighter regulations or a reassessment of Nigeria’s stance on digital assets remains to be seen, but one thing is clear: the intersection of cryptocurrency and traditional financial governance continues to be a contentious and evolving issue.