Binance Holdings Limited has urged a Federal High Court in Abuja to reverse the ex-parte order it granted to the Federal Inland Revenue Services (FIRS) to effect substituted service of all court documents in relation to a $79.5billion suit brought against it by the FIRS.
The FIRS is suing Binance and two of its representatives – Tigran Gambaryan and Nadeem Anjarwalla – and demanding $79.5billion in damages against them for alleged economic losses caused by their operations in Nigeria.
On Monday, Binance’s lawyer, Chukwuka Ikwuazom (SAN) told the court that his clients have filed a motion seeking the setting aside of the order for substituted service earlier granted the plaintiff.
Ikwuazom said it was his clients’
contention that the rules of the court for such service had not been complied with before the order was made.
Earlier, FIRS’ lawyer, Kanu Agabi (SAN) told the court that the cryptocurrency firm has served the motion on him before the commencement of the day’s proceedings.
Agabi indicated his intention to respond to the motion appropriately.
Justice Inyang Ekwo noted that a copy of the motion was not in the court’s file, following which Ikwuazom apologised and explained that the motion was filed last Friday.
Justice Ekwo subsequently adjourned till April 30 for hearing .
Binance is hinging its request on nine grounds , which includes that Binance is a company registered under the laws of Cayman Island and resident in Cayman Island.
Read Also: The Binance affair and the emerging truth
It argued that by the rules of the court, an originating process or any other document issued by the court could only be served on a company by delivering it to a director, secretary or other principal officer of the company or by leaving it at the registered office of the company.
Binance added that the originating documents in the suit cannot be served on a company such as the applicant by substituted means.
“By the Rules of this Honourable Court, service of originating processes outside jurisdiction can only be made in accordance with the provisions of Order 6 Rule 18 of the Rules of this Honourable Court (in the absence of a service convention) or in accordance with Order 6 Rule 20 of the Rules of this Honourable Court (where a service convention exists) and only after the leave of the Court to serve outside jurisdiction has been sought and granted,” the firm said.
It contended that the FIRS failed to comply with the process prescribed by the rules of the court for service of the originating processes on the company outside the jurisdiction of the court.
“The respondent also failed to obtain the required leave of this Honourable Court to serve the Originating Processes on the applicant outside the jurisdiction of this court,” it added.
Binance said “substituted service of a process on a defendant outside jurisdiction can only be made where the government or a court of the foreign country where the process was intended to be served certifies to this Honourable Court that the efforts made to serve the process have failed.”
In the substantive suit, marked: FHC/ABJ/CS/1444/2024 the FIRS is seeking nine reliefs, including a declaration that pursuant to all relevant laws, the defendants are liable to pay annual corporate income tax to the Federal Government for having significant economic presence in the country.
It wants the court to also declare that Binance and its representatives are liable to file their income tax to the agency for the year 2022 and 2023 respectively from the time they began to exercise significant economic presence in Nigeria.
FIRS is equally seeking a declaration that it is entitled, under Section 87(1) of the CIT Act Cap. C21, LFN, 2004; Sections 25(1) and 34(1) of the FIRS (Establishment) Act 2007, to recover from the defendants the cumulative sum of $2,001,000,000.00 being the amount due by way of income tax to the plaintiff from the defendants for 2022 and 2023 respectively.
It wants an order mandating the defendants to pay to the plaintiff the sums of $2,001,000,000.00 for year 2022 and for 2023, being the unpaid income tax due to the plaintiff from the defendants for the year 2022 and 2023 respectively.
Th FIRS is also praying the court for an order mandating the defendants to pay to the plaintiff the 10% addition for non-payment of income tax for year 2022 and 2023 respectively.
It further seeks an order mandating the defendants to pay 26.75% interest rate being the prevailing Central Bank of Nigeria (CBN) lending interest per annum from the 1st January, 2023 and 1st January, 2024 respectively when the tax become due and payable until it is fully paid.
The plaintiff stated, in a supporting affidavit, that the Federal Government discovered that Binance had been operating in Nigeria for over six years without registration.
It stated that this fact was confirmed by Gambaryan and Anjarwalla during a meeting with the Securities and Exchange Commission (SEC) in 2024.
The plaintiff claimed that in a letter, dated February 20, 2024, Binance admitted to having 386,256 active users from Nigeria on its platform, with a trading volume of $21.6 billion and a net revenue of $35.4 million for the calendar year 2023.
It accused Binance and its executives of multiple infractions, including offering financial services without the necessary licenses, operating without required permits, non-compliance with the money laundering Act, providing currency speculation services without proper authorisation, etc.
FIRS stated that Binance engaged in Virtual Asset Service Provider (VASP) activities in Nigeria, providing trading and custodial services to Nigerian users without proper registration with the relevant regulatory agencies, among others.
The FIRS and the Economic and Financial Crimes Commission (EFCC) are also prosecuting the cryptocurrency firm on separate charges before Justice Emeka Nwite (also of the Federal High Court, Abuja.