The US Securities and Exchange Commission (SEC) is investigating the world’s largest crypto exchange Binance for an initial coin offering (ICO). By failing to arrange for a required registration as a security, the company may have violated U.S. law.
Securities and Exchange Commission Investigates Binance
According to information from anonymous informants, the US Securities and Exchange Commission (SEC) is currently investigating Binance – Bloomberg reports. The background is an ICO that the crypto exchange conducted in 2017.
Binance started operations in 2017 and was able to become the leader of crypto trading platforms worldwide in a few years. In the year of its foundation, the company sold its own Ethereum token with BNB.
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Within 20 days, Binance raised $ 15 million in this way. The BNB token, which has grown over time into a coin with its own blockchain, had a price of ten dollarcent at that time.
Almost five years after the ICO, BNB is the fifth largest cryptocurrency by market capitalization with a price of around $ 284.
But the offer may have violated U.S. laws that would require registration as a security. One of the informants assumes that a result of the SEC is still a long way off.
At least months would pass before a result could be expected, he says. In addition, it is not clear whether any charges will be brought against Binance or individuals at all.
Between Binance and Binance.US illegal connections?
The investigation also includes the question of whether there is a relationship between Binance and Binance.US there are illegal connections. While Binance operates in many countries – including Germany – a separate company for the US market was founded in 2019.
The background is strict regulations in the USA, which would have prevented Binance from participating in the market. In order to still be represented, new structures were created that meet the official requirements.
Nevertheless, it can be Binance.US not applicable to all users in the United States. Users from New York or Texas do not have access to the platform. Compared to Binance, the US offshoot has a significantly reduced offer.
It is questionable for the SEC whether the necessary administrative differences between the two companies will be respected. Changpeng Zhao (better known as CZ) is particularly critical of this.
In this context, it is interesting for the SEC to know which shares CZ has in Binance.US holds up. In addition, there are so-called broker-dealer activities in the room.
In such activities, a stock exchange itself has a deeper influence on the processes of the market. This is done, for example, through investment consulting, financing of companies, the publication of research and research or the promotion of trading by users.
SEC and Crypto Firms – An Ongoing Conflict
That the SEC is targeting a crypto company is nothing new. Since December 2020, the SEC has been in litigation with Ripple Labs – the company behind Ripple (XRP).
Also with Ripple, the accusation is: securities trading without the necessary license. To date, a verdict is pending. Ripple is certainly the most famous incident of this kind, but not the only one.
The video platform LBRY, which forms a decentralized alternative to YouTube through blockchain technology and its own token, has also been subject to a lawsuit from the SEC since the beginning of 2021.
Are the disputes between Binance and the SEC obsolete?
For Binance and CZ, the news published by Bloomberg seems to be yesterday’s news. A new public response to the allegations has not yet been found.
However, CZ shared a user’s post on Twitter.
This same “Breaking News” was released a year ago. Nothing came of it. Yet here Carl is providing Zero context to another shallow tweet. #Binance works closely with the SEC. #BNB and @cz_binance are going to be fine. https://t.co/jy6Yk8Rv5w
– Crypto_$teveo (@crypto_SteveO69) June 6, 2022
The same urgent message was already there a year ago. Nothing came out of this. Binance works closely with the SEC. Everything will be fine for BNB and CZ.
A press secretary made a similar statement to Bloomberg and added:
We continue to meet all the requirements of the authorities.
Is Binance a center of money laundering?
Binance, meanwhile, is the target of further allegations. According to a report by Reuters, Binance processed a total of 2.35 billion US dollars from illegal sources in the form of cryptocurrencies from 2017 to 2020.
Binance is a center for hackers, fraudsters and drug traffickers who would launder money on the marketplace. The crypto exchange itself negates this thesis and claims to be able to intervene particularly effectively against money laundering.
BUILD debunks FUD.
This is 50+ pages of email records between our cyber security team (ex-law enforcement background) and the cherry picking, misleading, and time wasting journalists.
If you have time to waste, see the details and truth for yourself.https://t.co/Y8bAvS5edk
– CZ 🔶 Binance (@cz_binance) June 6, 2022
CZ shared long conversations that took place with Reuters in the run-up to the publication. Despite many hints, however, the journalists decided to represent the money laundering narrative. From CZ’s point of view, this is a targeted hoax and a waste of time.
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