The Philippine Securities and Exchange Commission (SEC) released an advisory to the public to be cautious when transacting with foreign corporations, organizations or entities that are not licensed or registered in the country.
The SEC reported that they received numerous claims of transactions with non-registered foreign entities whose products or services are reachable in the Philippines through their online apps and platforms.
According to Philippine law, an entity is required to register and obtain a primary registration with the SEC if they intend to conduct business in the country. These unregistered corporations and entities are reported to allow Filipinos to access their online platforms and permit the registration of client accounts through online means despite having no registration or license.
Moreover, numbered cases are recorded wherein Filipinos are targeted by the entities’ aggressive online advertisements in various social media networking sites like Facebook, YouTube or Instagram.
The unregistered online platforms include, but are not limited to, the following:
- foreign currency (FOREX) brokers and exchanges,
- digital asset/cryptocurrency/virtual asset exchanges,
- decentralized finance (De-Fi) investment platforms,
- yield farming/staking platforms,
- multi-asset/multi-security brokerage companies,
- websites for securities token offerings/token generation events,
- illegal investment scheme websites,
- binary options trading apps,
- pay-to-click/captcha websites,
- “play-to-earn gaming” platforms,
- various fiat/cryptocurrency gambling websites
- and various cryptocurrency-related investment websites.
SEC reminds the public to be careful and to do their due diligence prior to transacting/dealing with any entity, and to avoid transacting with corporations or entities without any registration or license to do business in the Philippines in order to avoid losing their earnings. Dealing with an unlicensed or unregistered entity and is based abroad runs the risk of not getting one’s money back once these are transmitted outside of the Philippines. However, SEC says that the decision still remains on the individual if it would transact with these entities and use their platforms.
The securities commission merely reminds and informs the public that unlike the non-registered entities, “dealing or transacting with registered domestic corporations or foreign corporations with registration to do business as a branch, regional operating/area headquarters or representative office within the Philippines assures domestic parties that they are duly protected by Philippine Laws.”
The public are also reminded of the risks of putting one’s earnings in unregistered corporations and entities or their platforms, that is reachable in the Philippines, but is operated by non-registered corporations of a foreign country, the government can offer very limited protection or, in some cases, no protection at all from any form of misconduct which may be caused or committed by these entities.
“Jurisdiction over fraud or any form of misconduct committed by these corporations falls under the jurisdiction of the foreign country where they operate. Domestic participants would have to go to the country where these platforms are registered and where they operate to file the appropriate complaint in order to seek redress” the SEC wrote.
Accordingly, Commissioner Kelvin Lester Lee recently wrote in a column for The Manila Times that the commission doesn’t say the public can’t and should not interact at all, as their focus is to protect the investors in regards to the growing cryptocurrency and fintech industry reminding them to “avoid transacting with entities without any registration or licenses to do business in the Philippines, especially if you do not understand the nature of the investment and have not done the prior necessary research and due diligence.”
“After all, at the end of the day, the SEC wants to protect the investor. We don’t want any of you to be hurt.” Lee stated. (Read more on: Commissioner Kelvin Lee: SEC is Merely Emphasizing that the Public be Careful)
The public are told that in case of doubt as whether or not it is safe to transact with an online platform or entity, always #CheckWithSEC in www.sec.gov.ph, if the corporation or entity is registered or not and queries or concerns may be sent via email to the PhiliFintech Innovation Office at firstname.lastname@example.org.
This article is published on BitPinas: SEC Releases Advisory Against Non-Registered Foreign Entities, Including Play-to-Earn Platforms