For the third time, Infrawatch PH, a public policy think tank in the Philippines has requested the government to ban the operations of exchange giant Binance in the country. This time, under the Securities and Exchange Commission (SEC).
“Aside from the Bangko Sentral ng Pilipinas, the other main regulator of virtual currency exchanges is the Securities and Exchange Commission. It has served the public well by banning unscrupulous online lending services. It should similarly do the same for unregistered and unregulated cryptocurrency exchanges in the country,” said Terry Ridon, Convenor of Infrawatch PH.
According to the letter of Infrawatch PH to the SEC and obtained by BitPinas, Binance has been doing businesses in the country as a virtual asset exchange platform without the basic requirement of registration of the Commission.
Timeline of Events:
- (June 8) CZ visited the Philippines and talked to PH Media re: Binance expansion
- (June 8) CZ said they intend to obtain a local crypto license
- (June 9) Then Finance Secretary Dominguez said Binance is not yet registered and they are monitoring it
- (June 10) Binance Scholarship for Filipinos
- (June 15) Infrawatch PH sent a letter to the BSP asking it to ban and suspend the exchange for illegally operating here.
- (June 16) Binance responds: “We are open to discussions”
- (June 16) Binance is hiring 2,000 more people
- (July 7) Infrawatch Letter to DTI
- (July 7) Binance Answers New Infrawatch Letter
- (July 11) DTI Responds to Infrawatch Letter
- (July 12) Binance Secures Regulatory Approval in Spain
Doing business without an SEC registration is illegal and should be banned, the think tank added.
Further, some of the features of Binance that it is doing illegally, according to Infrawatch PH, include Spot Trading, Margin Trading, Futures Contract, Options, Crypto Loans, and P2P Trading.
“We believe the above products are in the nature of securities, which under prevailing rules, may ‘not be sold or offered for sale or distribution within the Philippines without a registration statement duly filed with and approved by the Commission,’” the letter read. “As for futures contracts, this Honorable Commission has earlier issued a warning to the public on illegal futures trading in view of the suspension of pertinent rules. It was emphasized that those who offer futures and binary options trading may be held criminally liable under Section 28 of R.A. No. 8799.”
The think tank group also mentioned the advisory of the commission entitled “Advisory Against Dealing with Non-Registered Foreign Entities, Organization and Corporations”, which was published last September 2021, which identifies unlicensed Digital Asset/Cryptocurrency/Virtual Asset Exchanges as among the businesses that consumers should be wary of.
“If an entity or an activity is unlicensed or unregistered and is based abroad, you run the risk of not getting your money back once these are transmitted outside of the Philippines,” the Commission’s advisory read.
Other situations that Infrawatch PH mentioned as a proof to ban the exchange giant are the scenario where Binance is banned in several countries and the idea that Binance is a big player in the collapse of Terraform Labs’ LUNA and Terra USD Coins.
“Millions of Filipino Binance users are exposed to several financial risks every day and are left without recourse. Binance exploits the Philippine market without accountability,” the letter added.
In addition, the think tank also emphasized that it the unlicensed operations of Binance in the country will give an unfair competitive advantage to the 19 entities with a Virtual Asset Service Provider (VASP) license.
Infrawatch PH concluded their letter with these requests to the SEC:
- Conduct motu proprio proceedings on the illegal operations of Binance in the Philippines;
- Issue a cease-and-desist order to stop all operations of Binance, its affiliates, and partners in the Philippines;
- Impose the maximum fine or penalty against Binance and its workforce; and
- Reject any and all future applications of Binance and/or Binance affiliates to register with the SEC.
The think tank already wrote a request to ban Binance in the country to the Bangko Sentral ng Pilipinas (BSP) and to the Department of Trade and Industry (DTI). The DTI has responded to the letter, deferring the matter to the BSP and saying it does not regulate non-consumer products. Binance also reiterated its intent to obtain a virtual currency exchange license in the Philippines.
In an opinion article written by blockchain lawyer Rafael Padilla, he left a question to his readers after concluding that there is a regulatory gap on who should regulate VASPs, thus, there is a need for the Congress to pass a law that will fill in this regulatory gap, saying that, “Until then, are we sure that we can say that Binance is operating illegally in the Philippines?” (Disclosure: Atty. Padilla is a regular BitPinas contributor.)
This article is published on BitPinas: SEC Asked by Infrawatch PH to Ban Binance for Illegal Operations
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