Nigeria has recently escalated its regulatory crackdown on Binance. The country previously detained two Binance executives and recently filed a lawsuit against the crypto exchange, demanding $81.5 billion in damages.
On Wednesday, February 19, court documents show Nigeria filed a lawsuit against Binance, citing economic losses and back taxes. The lawsuit specifically alleges that Binance cost the country $79.5 billion by facilitating the trading of its local currency and that It owes $2 billion in back taxes.
The lawsuit stems from alleged legal losses due to Binance’s trading of its local currency and back taxes for operating in the country. Specifically, the country blames Binance for the rapid depreciation of its currency.
Binance is contesting the charges but has agreed to work with tax authorities over alleged missing tax payments. Moreover, due to regulatory pressure, Binance stopped offering naira trading to its customers in March 2024.
Why Nigeria is Targeting Binance
This situation marks an increase in Nigeria’s regulatory actions against the Binance exchange platform, which started in 2023 when Binance Nigeria Limited allegedly operated without proper registration.
In February 2024, Nigerian authorities detained two Binance executives, Tigran Gambaryan and Nadeem Anjarwalla. Anjarwalla subsequently fled custody, prompting the country to file tax charges against the exchange, while Tigran Gambaryan was eventually released after several appeals.
The crackdown was motivated by the country’s currency problems. In 2024, the country’s currency, the Naira, experienced a rapid devaluation, losing 41% of its value. According to economists, the depreciation was largely due to changing government policies.
The country’s leadership removed the naira’s peg to the US dollar and implemented liberalizing policies to attract foreign investment. Specifically, the country removed its fuel subsidies, which led to a rapid rise in the cost of living. This, in turn, fuelled widespread anti-government protests in the country.
Amid this crisis, many Nigerians began turning to less volatile crypto assets. Platforms like Binance allowed users to exchange the swiftly depreciating naira for more stable crypto assets, including stablecoins, which provided a better store of value.
However, the government blamed Binance for further weakening the country’s currency, resulting in a crackdown.
