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Binance didn’t register with SEC, Witness tells court


The trial of Binance Holdings Limited and its Executive Officer, Tigran Gambaryan, continued before Justice Emeka Nwite at the Federal High Court on July 2, 2024.

The case, prosecuted by the Economic and Financial Crimes Commission (EFCC), involves charges of tax evasion, currency speculation, and money laundering amounting to $34.4 million.

During the resumed cross-examination, the first prosecution witness, Abdulkadir Abbas, testified that Binance’s activities did not align with the Security and Exchange Commission’s (SEC) regulations.

Abbas explained that the SEC mandates registration and payment of fees for any virtual asset provider or digital asset service before commencing operations in Nigeria.

Abbas detailed the SEC’s requirements, highlighting that companies must undergo a registration process involving application and processing fees. He also noted that similar requirements apply to both virtual and non-virtual platform entities.

In response to questions from the first defense counsel, Babatunde Fagbohunlu, Abbas confirmed that the SEC has specific rules for Digital Asset Offering Platforms (DAOP), Digital Assets Exchanges (DAE), and Digital Assets Custodians (DAC), each with distinct registration requirements. For instance, there is a filing fee for either DAOP or DAE, and a minimum trade capital requirement of N500 million.

Abbas emphasized that the SEC’s rules aim to regulate and provide clarity to the capital market, as mandated by the Investment and Securities Act. When questioned about his expertise in digital assets, Abbas stated he understood digital asset activities according to the rules provided for their registration.

During the cross-examination, the second defense counsel, Mark Mordi, SAN, argued that the SEC’s Investment and Securities Act of 2007 does not cover cryptocurrency or virtual assets.

However, Abbas countered that virtual assets fall under the definition of securities in Section 315 of the Act. He explained that the SEC has issued regulations requiring digital and virtual asset service providers performing investment and security business in Nigeria to register with the SEC.

Abbas further elaborated that due to the market’s dynamic nature, the SEC has issued detailed guidelines, including an accelerated regulatory incubation program, to address specific functions such as digital asset issuance and cryptocurrency trading.

The trial continues as the court examines the regulatory compliance of Binance Holdings and its executive officer in relation to the SEC’s standards and the broader legal framework governing digital assets in Nigeria.

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