The SEC is investigating whether the world’s largest crypto exchange offered unregistered securities during its initial coin offering (ICO).
Bloomberg reported Monday that the Securities and Exchange Commission (SEC) is investigating whether Binance’s 2017 initial coin offering of its Binance coin (BNB) token was an unregistered security offering that should have been registered with the regulatory agency, citing anonymous sources.
During the height of the so-called ICO frenzy, the Binance ICO took place in July 2017 on numerous platforms, and the Binance exchange launched two days afterwards. According to Bloomberg, which cited anonymous sources familiar with the situation, at least one US resident claimed to have participated in the ICO, which may be a key fact in an SEC case if the agency decides to pursue one. The Securities and Exchange Commission (SEC) has declared most cryptocurrencies to be securities and has filed lawsuits against a number of ICO operations.
The SEC is also looking into market-making companies that conduct business with Binance and are completely or substantially controlled by Binance CEO Changpeng Zhao. Bloomberg reported that a person familiar with the investigation said that Binance US, a US-based affiliate of the global exchange, was under investigation.
One of the SEC’s main concerns, according to the report, is if Binance.US is truly independent of the global exchange and whether staff are engaging in insider trading.
Binance is already the subject of many federal investigations in the United States, including another SEC investigation. Last year, the US Commodity Futures Trading Commission began looking into the exchange’s trading activities.
Following an assessment of its practices last year, the Financial Conduct Authority ordered Binance Markets to suspend operations in the United Kingdom. Binance was also forced to stop operating in Ontario in June of last year.
The announcement of the SEC probe has sparked a negative reaction from traders, but it’s not just the BNB token that’s been impacted; the rest of the crypto market has also been hammered, resulting in a loss of almost $68 billion since the news first broke on social media roughly 12 hours ago.