"Binance operations in Nigeria are illegal," SEC reiterates

Over a month after its circular banning the operations of Binance, the Securities and Exchange Commission (SEC) on Friday reiterated that the operations of the global crypto exchange are illegal in Nigeria.

"Any member of the investing public dealing with the entity, making such solicitation is doing so at his/her own risk," says SEC.

Recall that in June when SEC declared Binance as an illegal entity in Nigeria, the company distanced itself from "Binance Nigeria Limited", the name of the entity that was mentioned in the June 9 circular from SEC. "Binance have issued cease [and] desist notice to the scammer entity "Binance Nigeria Limited". Don't believe everything you read in the news," Binance founder and CEO Changpeng "CZ" Zhao tweeted on June 18.

In another circular on June 28, SEC made reference to Binance official website to clarify any issues around mistaken identity. "[We] again reiterates that the activities of Binance, https://www.binance.com and any such other platform through which the Company solicits investors is neither registered nor regulated by the Commission and its operations in Nigeria are therefore illegal," SEC noted.

The commission further warned the general public against interacting with other unlicensed exchanges stating that "investing in crypto-assets is extremely risky and may result in total loss of their investment".

As of September 2020 (PDF), SEC's position was that a "crypto asset" is a virtual digital asset which is a form of security, unless proven otherwise. Hence, crypto comes under its regulatory purview. Later in 2022, the commission said that entities that intend to offer crypto-related services or products in Nigeria must secure a Virtual Asset Service Provider (VASP) licence.

Based on SEC's latest circular, Binance has not acquired this licence. The cryptocurrency exchange is yet to respond to our request for comment.

However, it is important to note that Binance operations are not unknown to the Nigerian government. Last year, the Nigeria Export Processing Zones Authority (NEPZA) said it would partner with Binance to establish the first virtual free zone in West Africa.

Mr Zhao has continued to build and deepen his relationship with regulators in Africa. In 2022, he was on an African tour, where he met with the presidents of the Central African Republic, Senegal and Cote d'Ivoire, however, Zhao did not visit Nigeria.

Within that period, Binance was looking for a government affairs manager for West Africa. Tola Odeyemi, a former policy expert at Uber, the Lagos state government and the Central Bank of Nigeria was hired for the role in May 2022.

In the same year, Binance appointed global political and business leaders and to its advisory board, including two Africans—Ibukun Awosika and Leslie Maasdorp. Speaking on the need of the board, the CEO of Binance they will enable the company to navigate "the most complex regulatory, compliance, political, and social issues that we, as a company, and the entire crypto industry will face today and in the future". The board is led by Max Baucus, a former U.S. Senate Finance Committee chairman and ambassador to China.