The recent lawsuit filed by the United States Securities and Exchange Commission (SEC) against Binance US, accusing the cryptocurrency exchange of operating an illegal securities exchange, appears to have had a ripple effect on Binance’s operations in Nigeria.
Following the SEC’s action, the Nigeria Securities and Exchange Commission (SEC Nigeria) has declared the activities of Binance Nigeria Limited, a subsidiary of Binance, as illegal.
The SEC Nigeria released a statement in response to the operations of Binance Nigeria Limited, warning the Nigerian public against engaging in crypto asset trading on the platform. The Commission emphasized that Binance Nigeria Limited is not registered or regulated by the SEC, making its operations in Nigeria unlawful.
It cautioned investors about the risks associated with investing in crypto assets and related financial products and services provided by unregistered and unregulated entities.
The SEC Nigeria’s statement mirrors the regulator’s commitment to investor protection and underscores the importance of complying with Nigerian regulations. The Commission urged Nigerians to exercise caution and refrain from investing in crypto assets through platforms that are not registered or regulated by the SEC.
The action taken by the SEC Nigeria against Binance Nigeria Limited is believed to be influenced by the SEC’s lawsuit against Binance in the United States. In the US case, the SEC charged Binance Holdings Ltd., BAM Trading Services Inc., and their founder, Changpeng Zhao, with various securities law violations.
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The SEC alleged that Binance and its founder, despite public claims, allowed high-value US customers to trade on Binance.com and maintained control over the operations of Binance.US behind the scenes.
The lawsuit led to Binance US stopping US Dollar trading as its banking partners in response to regulatory crackdown cut ties with the company.
The SEC Nigeria’s directive to Binance Nigeria Limited to immediately cease soliciting Nigerian investors serves as a strong message that operating within the boundaries of Nigerian regulations is essential.
The Commission also indicated that it will collaborate with other regulators in Nigeria to provide further guidance and take regulatory actions against similar platforms.
As the crypto industry continues to evolve, regulators worldwide are increasingly scrutinizing the operations of cryptocurrency exchanges to ensure compliance with securities laws and protect investors.
The actions taken by both the US SEC and the SEC Nigeria highlight the need for transparency, adherence to regulations, and investor caution when engaging in crypto asset investments.
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SEC’s statement
“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.“
“As the regulator with the statutory mandate of investor protection, the Commission urges Nigerians to be wary of investing in crypto-assets, and crypto-asset-related financial products and services if the service provider/its platform is not registered or regulated by the Commission”.
“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.”
“The Commission shall provide updates on further regulatory actions concerning the activities of Binance Nigeria Limited, and other similar platforms and shall work with other regulators in Nigeria to provide further guidance on this matter.”