The United States Securities and Exchange Commission (SEC) is reportedly investigating leading cryptocurrency exchange company Binance over unregistered token sales.
Per a Monday Bloomberg report, the investigation seeks to determine whether Binance’s native token, $BNB, would have been deemed a security under U.S. laws at the time when Binance held its initial coin offering (ICO) in 2017.
Citing people familiar with the matter, Bloomberg reported that the “confidential probe” alleges that BNB, which is now the world’s fifth-largest cryptocurrency, was illegally sold to U.S. investors. BNB currently boasts a $47 billion market capitalization and remains a key component of the Binance ecosystem despite ongoing efforts by the company to decentralize the asset.
Recall that the SEC had previously brought charges against several other crypto-related projects that raised funds from U.S. investors through ICOs. The regulator ruled that such tokens were securities and the companies that issued them were required to register with the SEC before conducting such fundraisers.
Binance Says Working with Authorities Amid Probe
A Binance spokesperson reportedly declined to comment directly on the probe. However, they did confirm that Binance has been working with authorities, adding that the “ongoing conversations with regulators include education, assistance, and voluntary responses to information requests.”
The alleged SEC probe into Binance will take at least a few months to materialize, according to the sources, and may not necessarily result in legal action against the company.
Meanwhile, news of a regulatory investigation into BNB securities status, as well as earlier reports of Binance’s involvement in money laundering, caused a momentary decline in the coin’s market value. The price of $BNB dropped from near $306 to as low as $286 following the news. The coin has since rebounded to $296 at the time of writing.
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