The federal government of Nigeria on Monday initiated criminal proceedings against Binance, a leading cryptocurrency exchange platform.
The Federal Inland Revenue Service (FIRS) on Monday announced the charges filed at the Federal High Court in Abuja.
In a statement signed by Dare Adekanmbi, the special adviser on media to the executive chairman of the FIRS, the charges accused Binance of four counts of tax evasion.
Joining Binance in the lawsuit, with number FHC/ABJ/CR/115/2024, are Tigran Gambaryan and Nadeem Anjarwalla, both senior executives of the exchange.
Among the charges levelled against Binance are allegations of non-payment of Value-Added Tax (VAT), Company Income Tax, failure to file tax returns, and complicity in aiding customers to evade taxes through its platform.
The Federal Government also alleged that Binance failed to register with FIRS for tax purposes and contravened existing tax regulations within the country.
A particular concern highlighted in the charges is Binance's alleged failure to collect and remit various categories of taxes to the federation, as mandated by Section 40 of the FIRS Establishment Act 2007.
Section 40 of the Act explicitly addresses the non-deduction and non-remittance of taxes, prescribing penalties, and potential imprisonment for defaulting entities.
The charges detailed specific instances where Binance purportedly violated tax laws, such as failing to issue invoices for VAT purposes, thus obstructing the determination and payment of taxes by subscribers.
"Any company that transacts business in excess of N25 million annually is deemed by the Finance Act to be present in Nigeria.
"According to this rule, Binance falls into that category. So, it has to pay taxes like Company Income Tax (CIT) and also collect and pay Value Added Tax (VAT).
"But Binance did not do this properly. So, the company broke Nigerian laws and could be investigated and taken to court for this infraction," Mr Adekanmbi said.
He said the government's commitment to enforcing tax regulations and combating financial impropriety in the cryptocurrency sector remains steadfast.
FIRS, empowered to assess, collect, and account for revenue accruing to the Federation, said it is determined to administer relevant tax laws effectively.
Background
In February, two of Binance's executives arrived in Nigeria to negotiate with the Nigerian authorities amid a crackdown on the crypto platform after the Nigerian government blocked the online platforms of Binance and other crypto firms to halt what it described as continuous manipulation of the forex market and illicit movement of funds.
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The two executives, Nadeem Anjarwalla and Tigran Gambaryan, were afterward detained by the Nigerian authorities with the Office of the National Security Adviser (ONSA) confirming that the crypto exchange platform, Binance, was being investigated.
They were subsequently charged before a Magistrate Court in Abuja.
On 28 February, the court granted the Economic and Financial Crimes Commission (EFCC) a 14-day remand order for the duo. Additionally, Binance was directed by the court to provide the Nigerian government with data regarding Nigerian users trading on its platform.
Due to Binance's non-compliance with the directive, the court extended the officials' remand for another 14 days to prevent potential evidence tampering. The case has been adjourned until 4 April.
On Monday, PREMIUM TIMES exclusively reported that Mr Anjarwalla, a Briton, who also has Kenyan citizenship, escaped custody on Friday from the Abuja guest house where he and his colleague were detained after guards on duty led him to a nearby mosque for prayers in the spirit of the ongoing Ramadan fast.
The detention of Binance officials in Nigeria commenced several months after the cryptocurrency exchange platform admitted guilt and consented to a $4.3 billion settlement for criminal money laundering accusations brought forth by the US Department of Justice.
Changpeng Zhao, also recognised as CZ and the founder and CEO of Binance, pleaded guilty and committed to stepping down. His criminal trial in the United States has been deferred to 30 April.
