Binance Nigeria Limited, the Nigerian subsidiary of the world’s largest cryptocurrency exchange, Binance, has been instructed to halt its operations by the Securities and Exchange Commission (SEC) of Nigeria. The SEC issued a statement on Friday, 11 June 2021, stating that Binance Nigeria is operating illegally in the country and has been ordered to cease all activities immediately.
The SEC’s statement cited the lack of regulation of cryptocurrencies in Nigeria as the reason for the order. The commission stated that Binance Nigeria is not registered with the SEC and therefore does not have the necessary licenses to operate in the country. The SEC also warned that any person or entity that deals with Binance Nigeria does so at their own risk.
Binance Nigeria has not yet issued a statement in response to the SEC’s order. However, Binance CEO Changpeng Zhao tweeted on 12 June 2021, stating that Binance is aware of the situation and is working with its legal team to resolve it. He also stated that Binance takes compliance seriously and will work with regulators to ensure that its operations are in line with local laws and regulations.
The SEC’s order comes amid a growing crackdown on cryptocurrency exchanges and trading in Nigeria. In February 2021, the Central Bank of Nigeria (CBN) issued a circular directing all banks to close accounts belonging to cryptocurrency exchanges and traders. The CBN cited the risks associated with cryptocurrencies, including money laundering and terrorism financing, as the reason for the ban.
The ban was met with widespread criticism from the cryptocurrency community in Nigeria, with many arguing that it would stifle innovation and hinder economic growth. Some cryptocurrency exchanges have since found ways to circumvent the ban by using peer-to-peer trading platforms or by partnering with foreign exchanges.
The SEC’s order against Binance Nigeria is another blow to the cryptocurrency industry in Nigeria. However, it is important to note that the SEC’s mandate is to protect investors and ensure that the capital market operates in a fair and transparent manner. The lack of regulation of cryptocurrencies in Nigeria has created a regulatory vacuum that needs to be addressed. It is therefore important for cryptocurrency exchanges and traders to work with regulators to develop a regulatory framework that will protect investors while also promoting innovation and growth in the industry.
In conclusion, the SEC’s order against Binance Nigeria highlights the need for regulation of cryptocurrencies in Nigeria. While the ban on cryptocurrency trading by the CBN may have been too harsh, it is important for regulators to ensure that the industry operates in a safe and transparent manner. Cryptocurrency exchanges and traders should work with regulators to develop a regulatory framework that will protect investors while also promoting innovation and growth in the industry.
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