Regulatory scrutiny and industry competition continues to cloud Binance’s future following landmark settlement.
The Philippines Securities and Exchange Commission (SEC) has issued a warning to the public concerning Binance’s unregistered operation. According to the filing dated November 28, the federal agency stated that the crypto firm is not “authorized to sell or offer securities to the public” in the country.
Despite the lack of registration and relevant licensing, Binance continues to escalate social media push to draw Filipino investors and traders to its platform, which is unauthorized without proper licenses.
Philippines SEC Flags Binance for Lack of Registration and Licensing
The SEC additionally warned that individuals who promote Binance in the Philippines may be subject to fines of up to PHP 5 million (approximately $90,260) or imprisonment for up to 21 years, or both.
In response to the SEC’s warning, a Binance representative told The Block that the firm is willing to cooperate with the SEC to resolve the regulatory concerns and operate within the legal framework in the Philippines.
“We acknowledge and respect the statement made by the Securities and Exchange Commission (SEC) of the Philippines. At Binance, we are committed to complying with all applicable local regulations. Under our new leadership, we have taken proactive steps to address the SEC’s concerns,” said the representative.
The General Manager at Binance in the Philippines, Kenneth Stern, is one of Binance’s executives that departed from the crypto exchange. Reports initially suggested that he left Binance this month; however, a spokesperson from Binance clarified that Stern had indeed made his departure in July.
Binance Under US SEC Investigation
Last week, Binance reached a landmark settlement with US authorities, including the Department of Justice (DOJ) and the Commodity Futures Trading Commission (CFTC). However, the plea deal excluded Binance’s resolution with the US Securities and Exchange Commission (SEC).
The SEC is still pursuing separate charges against Binance. As reported by WSJ this week, the SEC is still searching for evidence that Binance had backdoors to control assets on Binance US, similar to FTX and Alameda Research.
According to the latest developments, the legal team of Binance US successfully persuaded Judge Zia Faruqui that the SEC lacked solid evidence to support its claims of Binance US misusing customer’s assets.
In a federal court hearing on November 27, Judge Faruqui agreed that the recent plea deal proved that Binance’s former CEO Changpeng Zhao was unlikely to mishandle American users’ assets.
Despite this, the SEC remains skeptical about Binance US’s ability to protect user assets. The agency asserts that Binance US has not provided enough evidence to prove its innocence. Judge Faruqui has encouraged Binance US and the SEC to settle their dispute by December 15.
In June, the SEC filed lawsuits against Binance US and its parent company for operating unregistered exchanges and using customer assets for their own purposes. Following the allegations, Binance US suffered a 90% decline in assets deposited while its number of users dropped by 50%.
Binance’s co-founder CZ recently stepped down as the firm’s CEO after acknowledging breaching anti-money laundering regulations as part of a $4 billion settlement with the US DOJ. The world’s largest cryptocurrency exchange has agreed to admit guilt to criminal charges and pay a total fine of $4.3 billion.
The final verdict is set for February 23, 2024, with CZ potentially facing an 18-month prison term. Despite assurances that Binance will not be accused of misusing user funds or manipulating the market, CZ has been released on bail amounting to $175 million and is permitted to stay in the US until sentencing.
Binance asserts that it has the financial resources to meet its obligations and protect its customers’ assets. It looks like there is more work for the exchange to do!