The Philippine Securities and Exchange Commission (SEC) has issued a wave of public advisories against prominent decentralized cryptocurrency exchange dYdX, alongside four other decentralized trading platforms, warning the public that they are not authorized to solicit investments in the country.
In a series of advisories, the Commission stated that these platforms allow Filipino investors to connect digital wallets and electronically trade crypto-assets and derivative instruments. The SEC noted that such activities may constitute the unauthorized offering and sale of securities under the Securities Regulation Code (SRC). (Read More: SEC Sets Effectivity Date of Crypto Asset Service Provider (CASP) Rules)
A copy of the advisory vs dYdX is available at the end of the article.
The Targeted Decentralized Exchanges
- dYdX (DYDX TRADING PLATFORM): A decentralized platform that facilitates derivatives trading, particularly perpetual contracts on digital assets. As a non-custodial DEX, dYdX specializes in advanced margin trading and recently migrated to its own Cosmos-based blockchain. (Read More: What are the 10 Most Used Decentralized Exchanges?)
- Aevo (AEVO TRADING PLATFORM): A platform providing access to derivatives trading, including perpetual contracts and options on digital assets, through a blockchain-based infrastructure.
- gTrade (GTRADE TRADING PLATFORM / GAINS TRADE): A decentralized platform that facilitates the leveraged trading of crypto-assets and other financial instruments
- Pacifica (PACIFICA TRADING PLATFORM): An online trading platform providing access to crypto-asset trading and derivative instruments, positioning itself as enhanced by automation and advanced trading tools.
- Orderly (ORDERLY TRADING PLATFORM / ORDERLY NETWORK): A decentralized trading infrastructure that combines elements of centralized and decentralized finance (CeFi and DeFi) to facilitate trading using a shared order book system.
Regulatory Violations and the CASP Framework
According to the Commission’s records, none of the five platforms are registered as corporations or partnerships in the Philippines. Furthermore, the SEC confirmed that none of the entities hold the required Crypto-Asset Service Provider (CASP) authorization.
Under the SEC Rules on Crypto-Asset Service Providers, any local or foreign entity that offers crypto-asset services to individuals in the Philippines must register with the Commission and obtain appropriate licenses. The CASP framework mandates strict requirements, including a physical office within the country and a minimum paid-up capital of ₱100 million. (Read More: SEC Sets Effectivity Date of Crypto Asset Service Provider (CASP) Rules)
The SEC stated that these rules authorize the Commission to take enforcement actions against unregistered entities to protect the investing public from fraud and financial losses during periods of heightened market activity.
Warning to Local Promoters
The SEC strongly advised the public to exercise caution before investing in these or similar unregistered platforms.
The Commission also issued a stern warning to individuals promoting the targeted DEXs locally. Anyone acting as a salesman, broker, dealer, agent, representative, promoter, recruiter, influencer, endorser, or enabler for dYdX, Aevo, gTrade, Pacifica, or Orderly in the Philippines faces severe legal consequences.
Under Sections 28 and 73 of the SRC, violators may be held criminally liable and penalized with a maximum fine of Five Million Pesos (₱5,000,000.00), imprisonment of up to 21 years, or both. (Read More: SEC Sets Effectivity Date of Crypto Asset Service Provider (CASP) Rules)
This article is published on BitPinas: SEC Flags dYdX and Other Decentralized Exchanges for Unlicensed Operations in PH
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