The Securities and Exchange Commission has declared the activities of Binance illegal in Nigeria, in a move that could further worsen access to cryptocurrency for many Nigerians.
This is according to a published circular on the commission’s website dated June 9, 2023. The commission stated that Binance is neither registered nor regulated by it and its operation in the country are illegal.
It noted that anyone conducting business on the exchange is doing it at their risk. It said, “The attention of the Securities and Exchange Commission (the Commission) has been drawn to the website operated by Binance Nigeria Limited, soliciting the Nigerian public to trade crypto assets on its various web and mobile-enabled platforms.
“Binance Nigeria Limited is neither registered nor regulated by the Commission and its operations in Nigeria are therefore illegal. Any member of the investing public dealing with the entity is doing so at his/her own risk.”
The commission further urged Nigerians to be wary of investing in crypto-assets, and crypto-asset-related financial products and services if the service provider/ platform is not registered or regulated by it.
It added, “Nigerian investors are hereby warned that investing in crypto-assets is extremely risky and may result in total loss of their investment.
“By this circular, Binance Nigeria Limited is hereby directed to immediately stop soliciting Nigerian investors in any form whatsoever.”
SEC also stated that it will provide updates on further regulatory actions with respect to the activities of Binance Nigeria Limited, and other similar platforms and is set to work with other regulators in the country to provide further guidance on this matter.
Binance is the largest crypto platform in the world and has been embroiled in numerous regulatory battles across the globe.
On Monday, the US Securities and Exchange Commission filed charges against Binance for breaking US rules. On Thursday, Binance US said it was suspending US dollar deposits and withdrawals following enforcement of action taken by the US’s SEC.
Binance said, “In an effort to protect our customers and platform, today we are suspending USD deposits and notifying customers that our banking partners are preparing to pause fiat (USD) withdrawal channels as early as June 13, 2023. We encourage customers to take appropriate action with their USD.”
This move by SEC is set to disrupt the crypto market, especially following recent issues with other popular crypto platforms such as Paxful. Paxful, another big crypto platform, in April 2023, shutdown its operations due to regulatory challenges and key staff departures.
According to the Founder and Coordinator, Blockchain Nigeria User Group, Chimezie Chuta, this move by SEC is unlikely to bother crypto users. He stated that no exchange is currently licenced in the country and as such the crypto market will continue to operate, undisturbed.
He told The PUNCH, “SEC is just trying to sound an alarm in response to the FIRS decision to start taxing crypto.
“None of the exchanges have a license to operate in Nigeria. Legitimacy is another issue though. But people patronise them. The problem is that if anyone has issues with the platforms, you cannot legally seek redress. If you have an issue with Binance for instance, you cannot take them to court.
“I don’t see this, affecting traders because they are aware already. Anyone who is not aware is probably new to the space. Binance is registered as a tech company in the country, but because SEC is the entity that regulates the capital market, they are expected to issue licenses for exchanges to operate.”
He noted that to be licensed, platforms need to have a bank account. But this is impossible because of a Central Bank of Nigeria ban on crypto in the formal financial system.