Cryptocurrency exchange Binance is under strict investigation for alleged tax evasion in Nigeria, with one top executive escaping custody. Nigeria's Federal Inland Revenue Service (FIRS) reported on Monday that new charges for tax evasion had been filed against Binance at the Federal High Court in Abuja.
(Photo : Getty Images/ Justin Sullivan)
Who are the Accused?
The entities facing charges include Binance for alleged non-payment of Value-Added Tax (VAT) and company income tax. The company also failed to submit tax returns and allegedly aided customers in avoiding taxes through its platform. High-ranking executives Tigran Gambaryan, a U.S. citizen, and British-Kenyan Nadeem Anjarwalla were also implicated. The Nigerian authorities have detained both officials.
Free From Custody
Over the weekend, news broke of Anjarwalla's successful Friday escape from the Abuja guest house where the duo was held captive. This surprising revelation was corroborated by a Binance spokesperson, who stated, "We were made aware that Nadeem is no longer in Nigerian custody. Our primary goal remains on the safety of our employees, and we are working collaboratively with Nigerian authorities to resolve this issue quickly."
A Plea for Help
Family statements released on March 20 express profound distress at the detainment. Anjarwalla's wife disclosed her disappointment at her husband's inability to attend their son's first birthday. She reiterated that Anjarwalla did not wield the power to make consequential decisions at Binance and pleaded with Nigerian authorities to let the detained return home. Additional pleas were made to the British and Kenyan governments to facilitate Anjarwalla's return.
What are the Implications?
Authorities detained both executives, Gambaryan and Anjarwalla, in Nigeria on February 26. At the time, no allegations were made. However, the Abuja government blamed their employer for destabilizing the country's local currency. The Nigerian naira has drastically depreciated. It lost nearly 70% of its value against the U.S. dollar in the past year. This economic turmoil drove locals to cryptocurrencies. They used them as a safe haven. This was against the plummeting local currency. An alarming inflation rate recently reached nearly 30%.
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Binance's Troubles
Binance's issues in Nigeria seem related less to a crackdown on cryptocurrencies and more to concerns about the firm's operational integrity. Nigerian regulators highlighted two primary problems with Binance. Firstly, regulators are unclear about where the money goes or how it moves through the exchange. The exchange also allegedly aided speculation on the naira's price through its peer-to-peer marketplace.
Authorities declared Binance guilty of money laundering, with an incredible $26 billion worth of untraceable funds funneled through the exchange. Officials in Abuja also alleged that traders using the peer-to-peer platform to trade the local currency for U.S. dollar-pegged stablecoins, like tether, were bidding on the price to augment the exchange value. Consequently, Binance has since closed down its peer-to-peer trading platform in Nigeria.
A Repeating Pattern?
Echoing past tensions, the Securities and Exchange Commission of Nigeria issued a warning in July 2023, cautioning the public against conducting business with the cryptocurrency exchange. The official statement noted that "any investing public dealing with this entity" was faced with "a high level of risk" that might result in a "total loss of investments." With the unfolding events, Binance's future seems increasingly uncertain.
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