The Securities and Exchange Commission (SEC) of Nigeria has officially deemed the operations of Binance Nigeria, a subsidiary of the world’s largest crypto trading platform Binance, to be illegal.
according to statement Binance, which went public with the SEC on July 9, is promoting its web and mobile platform to Nigerian users without complying with regulatory requirements or registering with the commission.
The committee expressed its concerns, noting that Binance Nigeria is not authorized or regulated by the SEC, which makes its operations in the country illegal.
As the main regulatory body responsible for protecting investors, the Securities and Exchange Commission (SEC) emphasized that doing business with Binance Nigeria or any similar unregistered platforms comes with significant risks, warning investors to exercise caution when dealing with crypto assets and related financial products and services.
The move by the Nigerian Securities and Exchange Commission follows a lawsuit filed last Monday by the US securities watchdog against Binance, accusing the global cryptocurrency exchange of failing to register as a broker or exchange. The suit further alleged that Binance offered and sold unregistered securities to the public.
These legal challenges are putting pressure on Binance, which ranks first by market capitalization among all cryptocurrency exchanges.
Investor protection and compliance
Nigeria’s Securities and Exchange Commission introduced regulations for digital assets last year, signaling the country’s attempt to strike a balance between an outright ban on crypto assets and unregulated use.
This came on the heels of the ban of the Central Bank of Nigeria in 2021, which banned Banks and financial institutions from facilitating transactions or dealing in digital currencies.
Despite these restrictions, young Nigerians have embraced cryptocurrencies, using peer-to-peer trading platforms provided by cryptocurrency exchanges to circumvent bans imposed by the traditional financial sector.
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As regulatory scrutiny of the cryptocurrency industry intensifies around the world, authorities are stressing the importance of ensuring investor protection and compliance within the sector.
The actions by the Securities and Exchange Commission of Nigeria show the growing regulatory focus on cryptocurrency exchanges and their operations. The outcome of these legal challenges will have far-reaching implications for the future of cryptocurrency systems in Nigeria and beyond.