Regulator: Binance Nigeria Operations in Country Are Illegal

Nigeria’s securities regulator says a company called Binance Nigeria Limited is operating illegally in the country.

Binance, the world’s largest cryptocurrency exchange, tells PYMNTS this company being target by the Nigerian Securities and Exchange Commission (SEC) in a circular last week has nothing to do with them.

“We are aware of the circular, however, the entity mentioned in the circular is not affiliated with us,” a spokesperson said Sunday (June 11). “We are therefore seeking clarity from the Nigerian SEC and remain committed to working with them cooperatively on the next steps.”

The warning Friday (June 9) from Nigeria’s SEC came four days after its American counterpart took legal action against Binance.

“Binance Nigeria Limited is neither registered nor regulated by the Commission and its operations in Nigeria are therefore illegal,” the Nigerian SEC wrote in an announcement posted to its website. “Any member of the investing public dealing with the entity is doing so at his/her own risk.”

The commission also urged Nigerians to be wary of investing in crypto-assets or crypto-related financial projects that aren’t registered or regulated by the government.

“By this circular, Binance Nigeria Limited is hereby directed to immediately stop soliciting Nigerian investors in any form whatsoever,” the announcement said.

Last week, the U.S. SEC filed 13 charges against Binance and founder Changpeng Zhao for a variety of securities law violations, including artificially inflating its trading volumes, diverting customer funds, failing to restrict U.S. customers from its platform, and misleading investors about its market surveillance measures.

“Through 13 charges, we allege that Zhao and Binance entities engaged in an extensive web of deception, conflicts of interest, lack of disclosure and calculated evasion of the law,” SEC Chair Gary Gensler said in a news release.

Binance responded on its blog that it was “disappointed” with the SEC’s decision, arguing that the company has cooperated with the regulator’s investigations, worked to answer its concerns and tried to reach a negotiated settlement.

“While we take the SEC’s allegations seriously, they should not be the subject of an SEC enforcement action, let alone on an emergency basis,” the company said in the post. “We intend to defend our platform vigorously.”

Also last week, Binance’s America-based unit, Binance.US, said it would stop accepting U.S. dollar deposits and customers will soon not be able to withdraw dollars from the exchange.

Binance.US will change to a “crypto-only exchange,” the company said on its blog, with its banking partners preparing to suspend dollar withdrawal channels as early as June 13. However, the company has assured users that crypto-denominated trading, deposits, withdrawals, and “staking” will still be fully operational.

PYMNTS examined the SEC’s case against Binance — and fellow crypto company Coinbase — last week, noting both companies contend that cryptocurrencies are not securities and thus not subject to SEC rules.

“Coinbase bet the house on the possibility of running a legal and compliant crypto exchange in the U.S. The SEC is saying that because crypto assets are securities, that may be impossible,” PYMNTS wrote.

“If the SEC wins and the majority of cryptocurrencies are defined in court as securities, the asset class will become more or less banned in the U.S.”