Binance Executives Off the Hook in Nigeria Tax Evasion Case: What Does This Mean?

Big news for Binance and its executives caught in the crosshairs of Nigerian authorities! In a surprising turn of events, the Federal High Court in Nigeria has discharged Binance executives Tigran Gambaryan and Nadeem Anjarwalla from the highly publicized tax evasion case. But what led to this dramatic shift, and what’s next for Binance in Nigeria? Let’s dive into the details.

Nigerian Court Says ‘Not Guilty’ (For Now) to Binance Execs

For weeks, the legal saga surrounding Binance and its executives, Tigran Gambaryan and Nadeem Anjarwalla, has been making headlines. Accused of tax evasion by the Federal Inland Revenue Service (FIRS), the situation looked grim. However, Friday brought a significant change.

Here’s the breakdown of what happened in court:

• Fresh Charges, New Focus: The FIRS filed amended charges, now focusing solely on Binance as a corporate entity, after Binance officially appointed a Nigerian representative, Ayodele Omotilewa.
• Executives Discharged: Based on this new development, the court struck out the previous charges against Gambaryan and Nadeem, effectively discharging them from the FIRS tax evasion case.
• Binance Takes Center Stage: With the executives out of the picture in this particular case, Binance itself is now the sole defendant facing allegations of failing to collect and remit taxes, including VAT and CIT.
• Next Hearing: The case has been adjourned to July 12th. The court will then address Binance’s plea and discuss whether the newly appointed Nigerian representative needs to physically appear in court.

Why Were Gambaryan and Nadeem Initially Charged?

Let’s rewind a bit. Back in March 2024, the FIRS initiated legal proceedings against Binance and Tigran Gambaryan, alleging tax evasion. This was later amended in May, specifying accusations of failing to collect and remit Value Added Tax (VAT) and Company Income Tax (CIT), as mandated by Nigerian law.

The Nigerian government, through the Minister of Information, even stated that Binance’s turnover in Nigeria exceeded a staggering $20 billion in 2023 alone. This context highlights the potential scale of the alleged tax evasion.

What Transpired In Court on Friday?

The court proceedings on Friday were pivotal. Here’s a step-by-step look at what unfolded:

1. Binance’s Representation: Binance’s legal counsel, Tonye Krukrubo SAN, informed the court that Binance had officially appointed Ayodele Omotilewa as its Nigerian representative, communicating this to both the FIRS and the court.
2. FIRS Confirmation & Amended Charges: The FIRS counsel, Moses Idehu, verified this and requested permission to replace the old charges with a newly amended charge sheet dated June 13, 2024.
3. Binance as Sole Defendant: The amended charges, reviewed by Nairametrics, clearly listed Binance as the only defendant, removing Gambaryan and Nadeem from this specific FIRS case.
4. VAT Evasion Allegations: The core accusation against Binance remains that it allegedly offered crypto trading services to Nigerians without deducting the necessary Value Added Taxes (VAT) from its operations.
5. Dock Dilemma: The FIRS lawyer argued that Binance’s Nigerian representative should be made to enter the dock and enter a plea on behalf of the company.
6. Defense Disagreement: Binance’s legal team countered, stating that Nigerian law doesn’t necessitate a company representative to physically stand in the dock. They argued for alternative ways for a company to engage with court proceedings.
7. Discharge Request Granted: Seizing the opportunity, the defense requested the court to discharge Gambaryan and Nadeem, given the appointment of a representative and the amended charges.
8. FIRS Agreement: The FIRS confirmed that the case was now solely between the Nigerian government and Binance.

What Did the Judge Rule?

Justice Emeka Nwite addressed the contentious issue of whether Binance’s representative needed to be in the dock. He decided that both parties should submit written arguments on this matter for him to make a ruling later.

Crucially, Judge Nwite then announced a significant decision: “The charges filed on March 22, 2024, and May 17, 2024, are hereby struck out.” He further ordered the removal of Gambaryan and Nadeem’s names from the case. The next hearing is set for July 12th, focusing on Binance’s plea and the dock issue.

Important Note: This discharge only pertains to the FIRS tax evasion case. Gambaryan and Nadeem remain defendants in a separate case filed by the Economic and Financial Crimes Commission (EFCC), which involves allegations of money laundering and foreign exchange violations.

The Bigger Picture: Why Is Nigeria Cracking Down on Binance?

This legal battle is unfolding against a backdrop of increased government scrutiny of cryptocurrency exchanges in Nigeria. Here’s why:

• Currency Devaluation Concerns: The Nigerian government has accused cryptocurrency platforms, particularly Binance, of negatively influencing foreign exchange rates, contributing to the Naira’s significant devaluation.
• Foreign Exchange Reforms & Naira’s Plunge: Since Nigeria implemented foreign exchange reforms last year, the Naira has lost a staggering 70% of its value against the US dollar, exacerbated by dollar shortages.
• P2P Trading Under Scrutiny: Nigerian authorities, including the Securities and Exchange Commission (SEC), have specifically pointed fingers at Binance’s Naira P2P (peer-to-peer) feature, alleging it destabilizes the country’s exchange rate.
• Detention & Escape: The situation escalated when Nigerian authorities detained Tigran Gambaryan and Nadeem Anjarwalla in February 2024. Sadly, Nadeem Anjarwalla subsequently fled custody, adding another layer of complexity to the situation.

What Does Binance Say?

Binance maintains that Tigran Gambaryan’s detention is unjust. A Binance spokesperson, Ivy Shirinda, expressed “deep disappointment” that Gambaryan, whom they describe as having no decision-making power, remains detained. They emphasize his background in public service and crime fighting, asserting that the charges against him are “completely meritless.” Binance advocates for his release to allow ongoing discussions with Nigerian government officials to continue.

Looking Ahead: What’s Next?

While this discharge is a positive development for Gambaryan and Nadeem in the FIRS tax evasion case, the legal saga is far from over. Key questions remain:

• EFCC Case Still Looms: Gambaryan remains in detention and both executives are still facing serious charges in the EFCC case.
• Binance vs. Nigeria: The legal battle between Binance and the Nigerian government is now squarely focused on the company itself. The July 12th hearing will be crucial in determining the next steps in the tax evasion case.
• Regulatory Landscape: This situation underscores the evolving and often challenging regulatory landscape for cryptocurrency exchanges operating in Nigeria and globally.

The discharge of Binance executives in the FIRS case is a significant development, but it’s just one chapter in the ongoing story between Binance and Nigeria. The crypto world will be watching closely to see how these legal battles and regulatory discussions unfold.