The Securities and Exchange Commission (SEC) Nigeria has declared the activities of Binance as illegal in the country as it is neither registered nor regulated by the commission.
In a published circular on the SEC website dated June 9, 2023, the commission urged Nigerians to be cautious of investing in crypto-assets and crypto-asset-related products if the platform/service provider is not registered or regulated.
The circular noted that Binance Nigeria Limited’s operations in Nigeria are illegal and directed it to immediately stop soliciting Nigerian investors in any form whatsoever. It warned Nigerian investors that investing in crypto-assets is extremely risky and may lead to a total loss of their investment. The SEC further disclosed that it will provide updates on further regulatory actions with respect to the activities of Binance Nigeria Limited and other similar platforms in Nigeria.
The SEC’s action against Binance Nigeria Limited is a move to disrupt the crypto market, particularly following other recent issues with platforms such as Paxful. Noting that Binance is also facing a lawsuit in the United States as the US Securities and Exchange Commission filed charges against it on Monday.
Binance US has suspended US dollar deposits and withdrawals following the action taken by the US’s SEC. In an effort to protect customers and the platform, the exchange has been informing customers that its banking partners are preparing to pause fiat (USD) withdrawal channels as early as June 13, 2023. Binance US encouraged customers to take appropriate action with their USD.
This action by the SEC has highlighted the need for regulatory clarity in the country’s crypto space. According to a recent statement by the Central Bank of Nigeria, digital currencies have been banned for use as a means of payments since 2017. However, the bank clarified that it is not against the use of cryptocurrencies but only seeks to protect the financial system from the risk of crypto transactions.
It is crucial for crypto platforms to adhere to regulations and be registered with the relevant regulatory bodies in their respective countries to avoid being seen as illegal and disruptive. The action taken by the SEC should serve as a warning to other crypto platforms operating in Nigeria to be compliant or face regulatory action.