- Investors are rushing to withdraw funds after regulators banned exchange.
- Customers are trying to take their money off the exchange as the ban is enforced.
- 'A lot of wealth is being destroyed this week,' said one crypto expert.
Binance users in the Philippines are scrambling to withdraw their money from the crypto exchange as regulators block access to the website.
The rush followed an announcement on Tuesday that the Securities and Exchange Commission in the Philippines had formally requested the nation’s telecommunications regulator to block Binance.
The world’s biggest crypto exchange had drawn the ire of officials by failing to get an operating licence in the Asian nation, where crypto is super popular.
As a result, vendors on the Binance P2P marketplace are pricing Tether’s USDT at a 5 to 7% discount as they try to liquidate their inventories, according to screenshots shared with DL News by Luis Buenaventura, an assistant vice president at GCash and the co-founder of crypto exchange platform BloomX.
Massive fees
Retail customers are also contending with “massive” on-chain fees, in some cases more than $12 for trading Bitcoin and any Ethereum base layer tokens, or to move their holdings to other wallets or exchanges.
“All told, a lot of wealth is being destroyed this week,” Buenaventura told DL News.
He said customers were also forfeiting earnings in time-locked deposit instruments when taking money off of Binance.
The developments mark yet another crisis confronting CEO Richard Teng as he struggles to manage the vulnerabilities of the business model installed by his predecessor, Changpeng Zhao.
Binance’s penchant for operating in markets without registering or licencing its services has triggered a conflict with Nigerian authorities, who detained two senior exchange executives in February.
Legion of salesmen
In November, the Philippines SEC warned the public against using Binance because it was an unlicenced investment platform.
Regulators criticised the exchange for relying on a legion of “salesmen, brokers, dealers or agents, representatives, promoters, recruiters, influencers, endorsers, and enablers” to promote Binance.
The SEC said these agents could face up to 21 years in prison and a fine of 5 million pesos ($90,000).
Binance has not made any public statements regarding the matter. Binance did not respond to requests for comment from DL News.
‘The ban does not indicate any strong desire to protect the citizens they are responsible for.’
— Luis Buenaventura, GCash
Over the last few months, users in the Philippines have been waiting to see whether a ban would actually take effect.
The deadline passed with little fanfare or clarity, and the announcement Monday has come as a shock to many.
“The SEC is aware that Binance represents a major share of the Philippine crypto market, but their execution of the ban does not indicate any strong desire to protect the citizens they are responsible for,” said Buenaventura.
“There should have been regular reminders as well as a widely publicised deadline, but instead we got two press releases four months apart, and very little hard data.”
Plenty of warning
The SEC maintains that it gave people plenty of warning and time to exit the platform in light of the size and volume of Binance’s operations in the country.
“The SEC ensured that the investing public would have enough time to exit the platform and reposition their portfolio in favour of authorised investment products and platforms,” it said.
Enforcing the ban is currently in the early stages.
Some users are still able to access the site, while others receive either an error message or are redirected to a page bearing the SEC logo and a message that the site is not accessible.
One user told DL News that they could access the site while someone else on the same WiFi network was unable to — though they eventually too started to get an error message.
Rafael Padilla, legal director at Farcove Consulting in Manila, said recently he believed that neither the SEC nor the National Telecommunications Commission has the legal authority to order the blocking of Binance’s website.
‘Invidious discrimination’
He said blocking Binance’s website while letting local crypto exchanges offer similar products is “invidious discrimination.”
“It offends the right to equal protection, incidentally of Binance, but most importantly of Filipino users that SEC ironically wants to protect,” he said. “Many of whom use the platform for non-security related transactions.”
He added that other unregistered offshore exchanges could also be the subject of a similar enforcement action by the SEC.
As to whether Binance has a future in the Philippines, it’s difficult to say.
“It depends on whether Binance or its Philippines-based users are willing to question the SEC and the NTC’s blocking access order in court,” said Padilla.
Callan Quinn is DL News’ Hong Kong-based Asia Correspondent. Get in touch at callan@dlnews.com.