The Securities and Exchange Commission of the Philippines has brought a lawsuit against Binance trading platform. The regulators have alleged that Binance is operating as an unlicensed firm in their jurisdiction. As a result, Binance can face up to 21 years behind bars and $90K in legal fines.
The regulatory agency issued a warning against Binance on 28th November. The firm noted that Binance does not authorization to sell or deal in securities within the legal jurisdiction. At the same time, the regulators have noted that Binance should apply for registration and share details about listed securiites before selling them to the public.
According to the official notification, Binance should release important information such as cost of issuance, types of securities, and other data crucial for investors. The regulators have invoked Securities Regulation Code (SRC) that requires security services providers to get a registration before offering services to the citizens.
At the same time, Binance also needs to acquire a secondary license to offering security trading services in the country.
Security Regulators Charge Binance for Illegally Promoting Services in the Region
The database of the Philippines SEC has indicated that Binance is not registered as a legal entity within the country. At the same time, the firm has continued to operate without a license and legal authority to offer security services in accordance to the Section 3.1 of SRC.
On this account, the regulators have warned the firm regarding violation of criminal conduct in accordance with SRC section 28. This section deals with criminal conduct related to penalty of 5 million Philippine Pesos or $90,300 or 22 year imprisonment as per SRC, section 73.
SEC issued a statement to the press recently calling for assistance from National Telecommunication Commission and Department of Information. The regulator noted that this step will prevent citizens from using Binance or accessing it while within the legal jurisdiction of SEC.
At the same time, SEC has initiated request to Google and Meta to restrict any online advertisements from Binance to reach consumers in the Philippines. On the other hand, Binance Philippines accounts for one of the largest trading volume in the region. Cryptocurrency investors hailing from the country have reviewed the firm as reliable and stable on social media sites.
CZ Steps Down as CEO Following US SEC Lawsuit
Binance CEO CZ recently stepped down from his position at Binance.US as CEO. It is interesting to note that SEC Philippines signed a contract with SEC USA to fight against crypto crimes in 2023.
However, Binance has been operating in the region for many years and launched P2P support for Philippines Pesos in 2020. On the other hand, Bangko Sentral ng Philippines (BSP) implemented a moratorium on issuing new virtual asset services provider licenses for three years in September, 2022.
The Central Bank issued a statement regarding the regulatory changes retaining that the decision aims to balance financial innovation and managing associated risks. BSP also issued data on 30th June, 2022 indicates a list of 19 firms that have a VASP license. Five firms are still not operational while one of the regulated VASPs halted operations in January, 2022.
At the same time, BSP governor Felipe Medalla issued a statement in 2022 retaining that the Central Bank does not have any plans to impose a crypto trading ban since the region was ranked as 5th largest country in terms of crypto trading volume as per Finder survey in 2022.