The U.S. Securities and Exchange Commission (SEC) is reportedly investigating Binance’s BNB token, which could be an unregistered security. Binance may find itself in a similar spot to Ripple, who is in a ongoing legal battle with the SEC about the sale and use of the XRP token.
SEC Investigates Binance’s BNB Crypto
Bloomberg reports Monday that the U.S. SEC is looking into whether Binance Holdings Ltd. violated securities laws by conducting an initial coin offering of BNB tokens (ICO) five years ago. Bloomberg cited people who are familiar with the subject.
Binance, who could find that 2017 BNB sale was unregistered as a security offering in 2017, may face a similar fate to Ripple labs. Ripple has been in retaliation with the SEC since December 2020 over the sale XRP token. The SEC asserts that XRP constitutes security.
A person familiar with the matter said however that an SEC enforcement investigation involving BNB would likely take several months before it comes to a conclusion.
Binance told the news outlet: “it would not be appropriate for us to comment on our ongoing conversations with regulators, which include education, assistance, and voluntary responses to information requests.” However, the company stressed that it will “continue to meet all requirements set by regulators.”
Binance.us operates in the U.S. The global crypto exchange clarified that Binance.com and Binance.US “are separate entities.”
Binance.us independently issued a statement, emphasizing that it was “committed to upholding the highest standards of compliance.”
Multiple investigations are being conducted in Washington against the cryptocurrency exchange, according to the publication. In addition to investigating trading abuses committed by Binance Insiders, securities regulators are also looking into market-making firms linked to Binance CEO Changpeng Zhao.
BNB is the 5th-largest cryptocurrency in market capitalization. Its current price is $294.35 at the time this article was written. It fell by 11% Monday after the SEC news broke, but it has since recovered some of its losses.
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