FIRS Sues Binance for $81.5 Billion Over Tax Evasion and Economic Losses

The Federal Inland Revenue Service (FIRS) has taken legal action against Binance, the global cryptocurrency exchange, demanding a staggering $81.5 billion in penalties. The lawsuit, filed at the Federal High Court in Abuja, accuses Binance of operating without proper registration, failing to comply with Nigerian tax laws, and causing significant economic losses to the country.

According to FIRS, Binance owes $79.5 billion in damages from its unregulated operations and an additional $2 billion in back taxes for 2022 and 2023. This total claim exceeds Binance’s reported valuation by approximately $20 billion, or 31.45%.

Binance Under Legal Scrutiny

FIRS alleges that Binance failed to register for tax compliance, leading to substantial revenue losses for Nigeria. A May 2024 assessment by the Central Bank of Nigeria (CBN) estimated that Binance’s activities inflicted nearly $79.5 billion in economic damages within six months. Jimada Mohammed Yusuf, a member of the Special Investigation Team from the Office of the National Security Adviser, stated in an affidavit that Binance and its executives bear responsibility for these losses.

Despite previous assurances of cooperation with Nigerian authorities on tax matters, Binance has yet to officially respond to the lawsuit. The company is currently facing four counts of tax evasion, with allegations that it ignored FIRS’s tax demand notices.

Regulatory Breaches and Legal Consequences

The lawsuit details Binance’s alleged violations of multiple Nigerian financial laws, including:

• The Companies Income Tax Act
• The Federal Inland Revenue Service (Establishment) Act 2007
• The CBN Regulatory Framework for Mobile Money Services
• The Companies Income Tax Significant Economic Presence Order

These regulations dictate that foreign digital service providers with significant economic activity in Nigeria are subject to taxation. FIRS argues that Binance, despite its large user base in Nigeria, deliberately evaded tax obligations by operating covertly.

Binance’s Growing Legal Challenges in Nigeria

This lawsuit is part of a broader regulatory crackdown on cryptocurrency operations in Nigeria. Earlier in 2024, two Binance executives were detained by authorities amid heightened scrutiny of the company’s activities. Additionally, Binance is battling separate money laundering charges from Nigeria’s anti-corruption agency, allegations the company denies.

As the legal battle unfolds, this case is expected to have major ramifications for cryptocurrency exchanges operating in Nigeria. The outcome could shape future regulations governing digital asset platforms and reinforce stricter compliance measures within the industry.