Binance and Top Executives Face Legal Hurdles in Nigeria Over Tax Evasion and Money Laundering Allegations
Tensions escalated in the Nigerian judicial system as Binance, the world’s largest cryptocurrency exchange, found itself embroiled in a legal quagmire involving allegations of tax evasion and money laundering. The highly anticipated arraignment of Binance and two of its top executives, Tigran Gambaryan and Nadeem Anjarwalla, scheduled for Thursday before the Federal High Court in Abuja, was marred by procedural complications, leading to delays in the legal proceedings.
The case, brought forth by the Federal Inland Revenue Service (FIRS), Nigeria’s tax authority, and the Economic and Financial Crimes Commission (EFCC), the country’s anti-corruption agency, aimed to formally arraign the defendants on five counts of money laundering and tax evasion. However, the day’s events took an unexpected turn as both agencies encountered obstacles in serving charges on the defendants.
In the FIRS case, Moses Ideho, the lawyer representing the tax agency, informed Judge Emeka Nwite that despite concerted efforts, his client was unable to serve the charges on Tigran Gambaryan, one of the Binance executives charged in the case. Gambaryan, who is currently being held in custody by the EFCC in Abuja, Nigeria’s capital city, was denied access by the authorities, preventing the successful service of the charges.
Ideho revealed to the court, “My Lord, the prosecution has not been able to serve a copy of the charge on the second defendant (Tigran Gambaryan). As a result, we mobilized the court bailiff to serve the second defendant, but he was denied access, too.”
Consequently, the prosecution sought the court’s permission to serve Gambaryan with a copy of the charge and allow him to confer with his legal team to determine his mode of plea. However, Gambaryan’s lawyer, Chukwuka Ikwazom, a Senior Advocate of Nigeria (SAN), opposed his client’s taking of plea in the matter, citing the need for additional time to discuss the case with his client.
Ikwazom expressed his concerns, stating, “For another agency of government to say it has no access to the defendant shows the ‘seriousness’ of how the prosecution handles the case.”
After a heated argument over the failure of the government to effect service on the second defendant, Ideho sought an adjournment to enable Gambaryan to consult with his team of lawyers regarding the charge. The charge was eventually served on Gambaryan, prompting Judge Nwite to adjourn further hearing until April 19 for the arraignment of the defendants.
In a separate but related case against Binance and its executives before Judge Nwite, the proceedings were stalled due to a challenge raised by Mark Mordi, a SAN representing Gambaryan, regarding the mode of service of the money laundering charges.
During the hearing, EFCC lawyer Ekele Iheanacho urged the court to direct Gambaryan to take his plea. However, Mordi contested the joint nature of the charge, which included Binance, Gambaryan, and Anjarwalla as co-defendants, arguing that the EFCC was statutorily required to serve the charge on each defendant individually.
Citing Section 477 of the Administration of Criminal Justice Act (ACJA), 2015, Mordi contended, “This is a joint charge, and it is incumbent on the prosecution to serve the charge on the 1st defendant (Binance). Having not done that, I do not think this matter can go on. Each of the defendants should be served separately.”
The EFCC lawyer, Iheanacho, disagreed with Mordi’s submissions, asserting that Gambaryan declined to receive service of the charge on behalf of Binance. Iheanacho argued that Gambaryan qualifies as a representative of Binance in Nigeria, citing Section 487 of the ACJA, and should therefore receive the charge on behalf of the crypto exchange company.
Mordi refuted this claim, stating that his client declined to accept service on behalf of Binance because he is not a representative of the company in Nigeria. “My Lord, let us not treat this matter with trifle. Due process must be followed; service has not been effected,” Mordi emphasized.
After hearing arguments from both sides, Judge Nwite adjourned the case until April 8 for a ruling on the matter of service.
The charges against Binance and its executives stem from allegations that they failed to register with the FIRS for the purpose of paying relevant taxes administered by the service while offering services to subscribers on their platform. The FIRS case, marked FHC/ABJ/CR/115/2024 and filed on March 22, accuses the defendants of committing the alleged offenses on or about February 1.
Count one of the charges alleges that while involved in carrying and offering services to subscribers on their platform, known as Binance, the defendants failed to register with the FIRS for the purpose of paying all relevant taxes administered by the service.
The legal challenges faced by Binance and its top executives in Nigeria underscore the growing scrutiny and regulatory pressures surrounding the cryptocurrency industry. As the world’s largest cryptocurrency exchange, Binance’s operations have been subject to intense scrutiny from regulatory bodies across various jurisdictions, with concerns ranging from tax compliance to anti-money laundering measures.
The proceedings in Nigeria also highlight the complexities involved in navigating the legal and regulatory landscape of the rapidly evolving crypto space. Issues such as jurisdiction, service of charges, and the applicability of existing laws to emerging technologies have come to the forefront, posing challenges for both regulators and industry players.
As the legal battles unfold, the cases against Binance and its executives will not only test the robustness of Nigeria’s legal system but also set precedents for how the country approaches the regulation and taxation of cryptocurrency exchanges and related businesses operating within its borders.
The outcome of these cases could have far-reaching implications for the future of the cryptocurrency industry in Nigeria and potentially influence the regulatory landscape in other jurisdictions grappling with similar challenges. Ultimately, striking the right balance between fostering innovation and ensuring compliance with existing laws and regulations will be crucial for the sustainable growth of the digital asset sector.
EFCC, FIRS fail to arraign Binance officials in tax evasion, money laundering cases Published in premiumtimesng By Ameh Ejekwonyilo