Cryptocurrency giant Binance attempted to settle part of its four-year tax liability to Nigeria with a $5 million down payment as it sought the release of a detained executive last year.
The offer was made in August 2024 amid intense negotiations for the release of Tigran Gambaryan, Binance’s head of financial crimes compliance, who had been detained by Nigerian authorities on February 26, 2024. Gambaryan was accused of failing to cooperate with investigations into how cryptocurrency exchanges, including Binance, allegedly undermined the Nigerian economy and caused financial losses. Although he was later released on humanitarian grounds in October, legal proceedings against Binance remain ongoing.
According to Premium Times, Nigerian authorities claim that Binance provided financial services without obtaining the necessary licenses, violated the country’s Money Laundering Act, and offered speculative trading without authorization. Additionally, the government alleges that Binance’s peer-to-peer (P2P) platform disrupted the country’s exchange rate mechanisms by allowing traders to set arbitrary prices, thereby exacerbating volatility in the foreign exchange market and discouraging foreign investment.
Further claims suggest that Binance’s operations facilitated capital outflows and diverted import payments from regulated financial channels, increasing economic instability.
In a letter dated February 24, 2024, and addressed to Nigeria’s Office of the National Security Adviser, Binance admitted to operating illegally in the country for six years without registering with relevant regulatory agencies. The company also disclosed that by early 2024, it had 386,256 active Nigerian users, a trading volume of $21.6 billion, and net revenue of $35.4 million for the 2023 calendar year.
Tax Settlement Talks Collapse
Following the detention of Gambaryan and Nadeem Anjarwalla, Binance’s African regional manager, on February 26, 2024, Nigerian authorities demanded that the company settle its outstanding tax liabilities from 2020 to 2023, including a 10% annual interest on unpaid dues. However, Binance did not comply.
During an early August 2024 meeting, Binance acknowledged generating $35.4 million in revenue in 2023 and estimated its four-year revenue (2020-2023) at no more than $140 million. Based on this, the company calculated its tax liability at approximately $7 million and offered to make a $5 million down payment into an escrow account. Binance proposed that the funds would only be released to Nigeria upon Gambaryan’s release and departure from the country.
As part of the negotiations, Binance also agreed to consider providing Nigerian authorities with a list of its top 100 Nigerian users and hiring accounting firm Baker Tilly and blockchain analytics company Chainalysis to assess its exact tax obligations.
However, the Nigerian government rejected Binance’s offer, dismissing it as inadequate. According to officials, Nigeria expected a significantly higher settlement considering the company’s operations and alleged economic impact.
Tensions escalated when a lawyer from Binance’s legal team, Arnold & Porter, reportedly suggested that Gambaryan was being held hostage and warned that the U.S. government could pressure Nigeria with retaliatory actions. In response, Nigerian authorities immediately terminated negotiations.
“When you calculate the volume of trade and losses to our economy, we actually should be asking for more,” an official involved in the discussions stated. “We also need to emphasise our request for data. Without the requested data, Nigeria cannot calculate the volume of trade, let alone taxes owed by Binance. In the U.S., the company surrendered the requested data; why is Nigeria different? They (Binance) just felt we do not deserve much as a third-world country.”
Legal Battles Intensify
Nigeria has since initiated two separate court cases against Binance. The first, filed by the Economic and Financial Crimes Commission (EFCC), is a $35.4 million money laundering case. Initially, Gambaryan and Anjarwalla were named as defendants, but their names were removed when the charges were amended on November 25, 2024.
Key charges in the case include:
Operating without a valid financial license: Binance is accused of running financial services without proper authorization, violating Section 97 of the Penal Code Act.
Unauthorized financial operations: The company allegedly engaged in financial transactions outside permitted sectors such as insurance, stock broking, and pension fund management, an offense under Section 58(5) of the Banks and Other Financial Institutions Act, 2020.
Foreign exchange violations: Binance allegedly manipulated forex rates in Nigeria without being a recognized dealer in the country’s Autonomous Foreign Exchange Market, in breach of Section 29(1)(c) of the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act.
Money laundering: The company is accused of concealing the source of its revenue, including a cumulative $35.4 million in 2023 alone, violating Section 18(3) of the Money Laundering (Prevention and Prohibition) Act, 2022.
$79.51 Billion Tax Lawsuit
In a separate case, Nigeria’s Federal Inland Revenue Service (FIRS) filed a lawsuit against Binance Holdings Limited on February 19, 2025, at the Federal High Court in Abuja. The government is demanding:
- $79.51 billion and ₦231 million in compensation for economic losses.
- $2.001 billion in income taxes for 2022 and 2023, including penalties and interest.
- An order compelling Binance and its executives to file income tax returns for the relevant years.
- Recognition of Binance’s tax obligations for operating with a significant economic presence in Nigeria.
- Interest penalties, including a 10% annual fine and a 26.75% Central Bank of Nigeria (CBN) lending rate until the taxes are fully settled.
According to FIRS, Binance concealed its business activities despite maintaining a strong economic footprint in Nigeria. The company’s failure to register with tax authorities and its role in allegedly diverting capital from regulated channels are central to the lawsuit.
An affidavit accompanying the suit confirms that Binance has been operating in Nigeria for over six years without proper registration. The document reiterates that in 2023 alone, the platform had nearly 400,000 active Nigerian users, a trading volume of $21.6 billion, and net revenue of $35.4 million.
The ongoing legal disputes have significant ramifications for both Binance and Nigeria’s financial sector. If the courts rule in favor of the Nigerian government, Binance could face substantial financial penalties, regulatory restrictions, and possibly a permanent ban from operating in the country.
Meanwhile, Nigeria’s aggressive stance on crypto regulations could deter other digital asset firms from entering or expanding their operations in the country.