The activities of the cryptocurrency exchange Binance have been branded illegal by the Nigerian financial market regulator.  The Securities and Exchange Commission has warned the public and Nigerian investors who invest in this entity.

Binance Nigeria Limited, the subsidiary of the crypto exchange platform Binance is going through a difficult time in Nigeria. Its activities were branded "illegal" by Nigeria's Securities and Exchange Commission (SEC) on Friday, June 9.

The Nigerian financial market regulator explains that Binance Nigeria is "neither registered nor regulated" in Nigeria. It goes on to warn the Nigerian public and investment community of the risks involved in investing in this platform. "Any member of the investing public who deals with Binance Nigeria does so at his or her own risk [...] Investing in crypto assets is extremely risky and can result in the total loss of the investment," the SEC warned. Going a step further, the regulator orders the platform to “immediately stop soliciting Nigerian investors in any form whatsoever".

For most of the news outlets covering the story,  this is the first time such an order is issued to a crypto company in Nigeria. It is even more interesting because Binance Nigeria is a branch of one of the world's leading crypto exchanges. 

The subsidiary is yet to comment on the order. It is worth noting that Nigeria was ranked the first country in Africa and eleventh in the world in terms of cryptocurrency adoption by US blockchain analytics firm Chainalysis in mid-September 2022. The West African country had around 22.33 million cryptocurrency holders, representing 10.34% of the population in 2022, according to the 2022 "Global crypto adoption" report published by Triple A last September.

For the moment, it would be difficult to measure the impact of this SEC decision on Nigeria, more specifically on the crypto community. However, the move by Nigeria's financial market regulator comes just days after the US Securities and Exchange Commission filed a civil lawsuit against Binance's US subsidiary for regulatory non-compliance. Following this decision, Binance US suspended dollar deposits on its platform and is reportedly preparing to suspend withdrawals as well.

Binance has been going through a difficult period in recent months. In March 2023, the cryptocurrency exchange suffered a major blow when customers withdrew up to $1.6 billion from its platform in less than two days. On top of this, complaints were repeatedly filed against it in the USA for violating US regulations.

Chamberline Moko