The following paper is a contributed article by Atty. Rafael Padilla, author of Fintech, First Laws and Principles, about the Binance situation in the Philippines.

BitPinas remains open to statements from all parties related to the recent Binance news in the country.

Binance’s Website Can’t be Blocked Without Court Order

By Rafael Padilla

SEC’s initiative to block www.binance.com

In their public advisory dated 28 November 2023, the Securities and Exchange Commission (SEC) warned the public from trading on Binance’s cryptocurrency exchange. The SEC alleged in the advisory that Binance allowed the offering of unregistered investment products such as “spot trading using leverage, futures contracts, option contracts, cryptocurrency savings accounts, cryptocurrency staking services, and a platform for initial coin offerings.” The SEC also found that Binance “has been actively employing promotional campaigns on social media to attract Filipinos to engage in investment and trading activities.”

In their press release issued on the following day, the SEC said that it will move to have Binance’s website, www.binance.com, blocked in the Philippines. The SEC said that it will request assistance from the National Telecommunications Commission (NTC) and the Department of Information and Communications Technology (DICT) to block Philippine residents from accessing Binance’s website. According to the SEC, this measure “will prohibit users from accessing the website and its applications while inside the country.”

The SEC also noted in the above press release that the blocking of www.binance.com is expected to take effect within three (3) months from the issuance of the advisory. The three-month deadline was intended “to give Filipino investors who have holdings in Binance to close their positions and take out their investments.”

This regulatory development has given rise to an important legal question: can the NTC, upon the request of the SEC, legally block access to www.binance.com or any other site or application associated with Binance?

Without a court order, the answer is NO.

Constitutional issues concerning agency-issued blocking order

It is highly unlikely that the NTC would be able to legally justify an order requiring internet service providers (ISPs) to block access to Binance or any other unregistered offshore exchange. This view finds support in the case of Disini v. Secretary of Justice^[1] where the Supreme Court declared Section 19 of the Cybercrime Prevention Act^[2] as unconstitutional for violating the freedom of expression and the right against unreasonable searches and seizures. The infamous Section 19 authorized the Department of Justice (DOJ) to restrict or block access to any computer data^[3] involved in the commission of any of the cybercrime defined under the Cybercrime Prevention Act. According to the Supreme Court, computer data— which includes programs or lines of code—constitute personal property that are “protected from unreasonable searches and seizures, whether while stored in their personal computers or in the service provider’s systems.” The Philippine Constitution requires search warrants to be issued only upon probable cause to be determined personally by a judge. But Section 19 authorized the DOJ to effectively seize and place computer data under its control and disposition without a warrant. The Supreme Court ruled that a DOJ order cannot substitute for judicial search warrant.

Section 19 which authorized the DOJ to block access to computer data is also offensive to freedom of expression. “The content of the computer data can also constitute speech” said the Supreme Court, and “Section 19 operates as a restriction on the freedom of expression over cyberspace.”

The case of Disini illustrates that a law authorizing an enforcement agency to order ISPs to block access to a website, applications or other computer data could pose constitutional problems for the NTC and other government agencies like the SEC. And it would raise a much more serious legal issue for the regulator or law enforcement agency if it cannot point to any specific statutory grant authorizing the agency to order the blocking of a website.

SEC, NTC and DICT cannot issue blocking order to enforce securities law

The Securities Regulation Code^[4] (SRC) did not expressly grant the SEC the authority to block access to websites or platforms where securities are sold or distributed. While the SRC empowers the SEC to enlist the aid and support or deputize government enforcement agencies to implement SEC’s powers and functions expressly granted by the same law,^[5] it does not automatically follow that the SEC can simply request the NTC to order ISPs to block Binance or any other unregistered crypto exchange’s website or application due to alleged violation of securities law.

Similarly, the Public Telecommunications Policy Act of the Philippines^[6] did not grant the NTC any authority to order ISPs to block websites from being accessed from the Philippines. As a specific exception, a law expressly granted NTC this authority but only in relation to child pornography and other online sexual abuse or exploitation of children (OSAEC).^[7] Therefore, in the absence of an express statutory authority, it would not be legally feasible for the NTC to order ISPs to block websites for purposes of enforcing securities regulation.

Lastly, the DICT Act of 2015 did not grant the DICT any power to issue a “blocking access order.”^[8]

Conclusion: www.binance.com can only be blocked via court order

While the agency’s vigilance in enforcing securities law should be commended, the SEC through the assistance of the NTC and the DICT cannot just restrict access to or block Binance’s website based on allegations that Binance is violating Philippine securities law. There is no statutory basis for this type of enforcement action particularly when it comes to securities regulation.

The SEC and its officials invoke investor protection as the impetus of its initiative to urgently block Binance’s website in the Philippines. But even the Financial Consumer Protection Act did not expressly empower financial regulators like the SEC the authority to directly issue blocking access orders, or indirectly by requesting the NTC to issue the same order.^[9] To insist that Binance’s website can be blocked upon the order the NTC or the DICT would be to take a drastic shortcut that is not sanctioned by the law and regulation that the SEC seeks to enforce.

The only scenario by which the SEC can successfully block www.binance.com in the Philippines is by filing a civil or criminal case against Binance for violation of the SRC, and requesting the court to order the blocking of Binance’s website. In other words, the SEC must first prove in court its allegations regarding Binance’s violation of Philippine securities law.

The question on whether Binance’s website should be blocked in the Philippines should be decided by a court based on the evidence presented by both parties during the trial. Consistent with due process and fair play, it is only through this judicial process where Binance can fairly meet the case filed by the SEC against it. To echo the words of the Supreme Court in the Disini case, “it is not enough for (the agency) to be of the opinion that such content violates some law, for to do so would make him judge, jury, and executioner all rolled into one.”

1. G.R. Nos. 203335 (2014). ↑

2. R.A. No. 10175 (2012). ↑

3. Computer data may refer to entire programs or lines of code, including malware, as well as files that contain texts, images, audio, or video recordings. (Disini v. Secretary of Justice, supra). ↑

4. R.A. No. 8799 (2000). ↑

5. Sec. 5(h), SRC. ↑

6. R.A. No. 7925 (1995). ↑

7. See Sec. 9 (3), R.A. No. 11939, otherwise known as “Anti-Online Sexual Abuse or Exploitation of Children (OSAEC) and Anti-Child Sexual Abuse or Exploitation Materials (CSAEM) Act.” (2022). ↑

8. See Sec.6, R.A. No. 10844 on powers and functions of the DICT (2016). ↑

9. See Sec. 6 (d), R.A. No. 11765 (2022). ↑

This is an opinion article submitted to BitPinas: Rafael Padilla: Binance’s Website Can’t be Blocked Without Court Order

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