The ongoing legal disputes involving Binance have brought the company under intense scrutiny and highlight the difficulties cryptocurrency exchanges encounter when negotiating regulatory frameworks and compliance standards across multiple countries.
Binance, the well-known cryptocurrency exchange platform that operates in nearly 100 countries worldwide, has found itself embroiled in a series of legal challenges and controversies. One such incident involves a fraudulent entity known as Binance Nigeria Limited, which has recently come under scrutiny by the Nigerian Securities and Exchange Commission (SEC). The SEC issued a circular on June 9, unequivocally declaring the illegality of Binance Nigeria Limited’s operations within the country.
In response to this development, Binance’s CEO, Changpeng Zhao, took to social media platform Twitter on Sunday, June 18, to announce that the company had officially served a cease and desist notice to the aforementioned fraudulent entity, Binance Nigeria Limited. This move by Binance signifies its intent to distance itself from any association with the fraudulent operations being conducted under its name in Nigeria.
Clarifying its stance on the matter, a spokesperson for Binance refuted any affiliation with Binance Nigeria Limited as mentioned in the SEC’s circular. The spokesperson further reiterated the company’s commitment to seeking clarity from the Nigerian SEC while expressing its willingness to cooperate with the regulatory authority on the subsequent steps to address the issue. Binance’s spokesperson made it clear that the company intends to resolve the matter and rectify any misperceptions or misunderstandings surrounding its involvement in Nigeria.
However, it is worth noting that Binance’s legal troubles are not limited to Nigeria. Simultaneously, the cryptocurrency exchange giant finds itself entangled in a lawsuit filed by the United States Securities Exchange Commission (SEC). The U.S. SEC has levied a total of 13 charges against various Binance entities and Changpeng Zhao himself. Among the charges are allegations of operating as an unregistered exchange, broker-dealer, and clearing agency, as well as misrepresenting trading controls.
The U.S. SEC’s case against Binance and Zhao stems from their failure to register as an exchange, broker-dealer, or clearing agency, despite reportedly generating a substantial $11.6 billion from U.S. customers. The regulatory authority has accused Binance of circumventing the necessary legal requirements and failing to comply with the regulatory framework put in place to protect investors and maintain market integrity.
However, amidst these legal battles, a recent development on June 17 provided a glimmer of respite for Binance in the United States. U.S. Judge Amy Berman Jackson approved an agreement reached between Binance.US, the U.S.-based arm of the exchange, and the U.S. SEC. As a result, a previous temporary restraining order, which sought to freeze all assets belonging to Binance.US, was dismissed. This agreement represents a step toward resolving the ongoing legal dispute between Binance and the U.S. SEC, albeit with future implications yet to be fully realized.
Binance, which initially registered its headquarters in George Town, Cayman Islands, in 2017, has expanded its global presence by establishing subsidiary branches in various locations. One such subsidiary was registered in Mahe, Seychelles, in 2019. These strategic moves were aimed at facilitating the company’s operations and extending its reach across different jurisdictions.