SEC Cautions Public Not to Invest with Binance, Exchange Says Infrawatch Complaint is Misleading

• The Securities and Exchange Commission (SEC) responds to Infrawatch, cautioning the public to not invest with the exchange
• Binance, in a response to BitPinas’ inquiry, said it is looking forward to an open dialogue with the SEC
• Update: 7:23 pm: Binance sent a letter to SEC as well.

7:24 PM: A Binance spokesperson provided an update to BitPinas:

“We have written to the SEC to clarify the false and misleading allegations in the Infrawatch complaint and the SEC have acknowledged our letter.“

Binance Spokesperson

Unfortunately, Binance was unable to share their response letter with BitPinas at this time.

Original article follows:

Infrastructure think tank Infrawatch has received a response from the Philippines Securities and Exchange Commission’s Enforcement and Investor Protection Department (SEC-EIPD) regarding the former’s letter to the regulator, asking it to investigate Binance because it is operating in the Philippines without proper registration.

BitPinas has requested for the SEC and Binance for comments regarding this developing story.

SEC’s Arra Francia confirmed to BitPinas the legitimacy of the letter but did not provide further comments.

“With regards to the response letter to Infrawatch, we can confirm that it is legitimate,” Francia said.

Binance has provided the following response:

“We are aware of the letter from the SEC to Infrawatch dated 2 August 2022 which is published on the Infrawatch website,” Binance said

“We are fully aligned with the SEC’s mission to protect users and this is at the forefront of our operating principles. Binance believes that the key to user protection is through regulation and developing regulatory frameworks that evolve with innovation. As a global blockchain infrastructure provider, Binance is constantly working with key stakeholders to invest in broader user education campaigns. We encourage the growth of positive innovations such as blockchain and look forward to having open dialogue with the SEC and any other industry participants that share our vision of financial inclusion and empowerment,” the exchange added.

Around 6PM, Binance sent the following message to BitPinas: “We have written to the SEC to clarify the false and misleading allegations in the Infrawatch complaint and the SEC have acknowledged our letter.“

Unfortunately, Binance was unable to share their response letter with BitPinas at this time.

Timeline of Events:

In the response letter forwarded to BitPinas, SEC confirms that Binance is not a registered corporation or partnership. “Consequently, Binance does not possess the necessary authority and or license to solicit investments as only registered corporations can apply for and be issued the necessary licenses to solicit investments.”

“Considering these circumstances, we caution the public not to invest with Binance,” the letter stated.

The SEC enforcement office is encouraging investor-victims to file a notarized complaint with the department. 

Terry Ridon, the convenor of Infrawatch, said the think tank welcomes this “significant development.”

“This provides policy clarity on the position of the government on unauthorized and unlicensed cryptocurrency platform operations in the country,” Ridon said. 

“This advisory provides immediate protection to Binance users who may have lost their money investing in an unlicensed platform,” he added, noting that it provides a way to ensure greater accountability in the cryptocurrency sector.

“As more Filipinos participate in this emerging sector, it is the duty of government to ensure that all service providers follow strict regulatory mechanisms and undertake commitments protecting the investing public.”

On July 26, 2022, BitPinas received a report that Infrawatch sent a letter to the SEC calling or immediate action against Binance for operating in the Philippines without registration. 

Previously, Infrawatch also sent letters to the Bangko Sentral ng Pilipinas (BSP), and to the Department of Trade and Industry (DTI), to suspend the global exchange. With the BSP, Infrawatch argued that Binance does not have a virtual asset service providers license (VASP). With the DTI, the think tank said the exchange is doing illegal promotions without the necessary permits.

To the best of BitPinas reporters’ knowledge, at least one of the agencies – DTI – replied to Infrawatch, telling the think tank to address the matter to the BSP because, in its view, cryptocurrencies are not “consumer products.”

“Cryptocurrency and other forms of virtual assets are not consumer products…The [DTI] has no jurisdiction to act on applications for sales and promotion permits to promote virtual assets per se in the absence of clear legislation on the matter,” the DTI responded.

The CEO of Binance, Changpeng “CZ” Zhao, was in the Philippines last June, expressing the company’s intention to get licenses in the Philippines. 

“There are at least two licenses that we are interested in. There is VASP (Virtual Asset Service Provider) license. There is an EMI license, which is more for traditional services,” Zhao said in his media interview.

Zhao also revealed plans to sponsor Filipino college students to become scholars of the company through the “Binance Scholarship” program. 

In an opinion article published on BitPinas, Atty. Rafael Padilla opined on who should be regulating VASPS in the Philippines. “I think there’s a regulatory gap on who should regulate certain VASPs because some categories neither fall within BSP nor SEC’s regulatory ambit.”

“In other words, there needs to be a law, an act of Congress, to fill in the regulatory gap concerning VASPs,” Padilla concluded.

A copy of the SEC response letter can be found here and on the Infrawatch website.

This article is published on BitPinas: SEC Responds to Infrawatch: Binance is Not Registered, Cautions Public Not to Invest

Disclaimer: BitPinas articles and its external content are not financial advice. The team serves to deliver independent, unbiased news to provide information for Philippine-crypto and beyond.