The initial coin offering that served as the cornerstone of the launch of the Binance cryptocurrency exchange in 2017 is getting a fresh look from federal regulators.
According to anonymous sources cited in a Bloomberg report today by Tom Schoenberg and colleagues, the Securities and Exchange Commission (SEC) is revisiting the origins of the exchange's Binance Coin (BNB) for potential violations of securities regulations. Since its launch in 2017, Binance has become far and away the largest cryptocurrency exchange on the market by trading volume.
News of the federal regulatory probe comes just as Reuters released the results of an unrelated investigation in which the news service claims that at least $2.35 billion in illicit funds have been laundered through Binance between 2017 and 2021.
At Least $2.4B in Crypto Has Been Laundered Through Binance: Report
A new report from Reuters estimates that at least $2.35 billion in illicit funds have been laundered through Binance between 2017 and 2021. The news agency analyzed court records, spoke with law enforcement, and worked with blockchain analysis firms Chainalysis and Crystal Blockchain to track illicit funds on the exchange. As of Monday morning, Binance was the largest crypto exchange, accounting for $10.5 billion in spot and $41.4 billion in derivatives volume over the last day, according to Co...
It is unclear what prompted this latest look back by the SEC, but BNB is currently the fifth-largest cryptocurrency, according to CoinMarketCap, logging a total market cap of $48 billion and 24-hour trading volume of $1.4 billion as of this writing.
At the heart of the case is the SEC's regulatory authority over investment contracts, and whether digital currencies qualify as such—particularly if they are sold to investors as a way to fund a company with the promise of profiting from the company’s efforts.
BNB was created in July 2017 as an ERC-20 token on the Ethereum blockchainblockchain before shifting to a separate Binance Chain. The initial coin offering of 100 million tokens at 15 cents per token raised $15 million. Now the native currency on the Binance crypto exchange, BNB can be traded directly, used to make purchases and payments, and pay a discounted rate on Binance transaction fees.
SEC Chair: Coinbase Lists 'Dozens of Tokens That Might Be Securities'
The stakes in an ongoing battle between the Securities and Exchange Commission and Coinbase got higher on Tuesday as the agency's chairman, Gary Gensler, suggested the biggest crypto exchange in the U.S. may be breaking the law. Speaking at a hearing convened by the Senate Banking Committee, Gensler observed that Coinbase did not have a license to operate as a stock exchange "even though they have dozens of tokens that might be securities." Gensler's remark was notable given that it did not come...
Bloomberg asserts that Binance "faces multiple investigations in Washington," which in turn are part of dozens of enforcement actions over ICOsICOs.
In a statement to the financial news outlet, Binance said, “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,” adding, “We will continue to meet all requirements set by regulators.”
Those regulators may also be looking at Binance US, an affiliate company founded in 2019, and whether it's sufficiently separated from its global parent.
Bloomberg quoted company officials in clarifying that “Binance.US is a separate US-focused trading platform that services US users by offering products and services that are compliant with US federal and state regulations," and a separate statement from Binance US affirming its commitment to compliance.
Binance Removes Company Name From Its Blockchain Network Branding
Binance, the world's biggest cryptocurrency exchange, today rebranded its blockchain networks. In a Tuesday announcement, Binance said that Binance Chain and Binance Smart Chain (BSC) would become one ecosystem: BNB Chain. Importantly, the move removes the company's own name from that of its blockchain network, which in the past has been criticized for being more centralized than its competitors, such as Ethereum. Right now, Binance Chain and BSC are two separate blockchains. Binance Chain allow...
In March, Binance was hit with a $5 million class-action lawsuit in which users claimed the exchange sold them 79 different crypto assets (including Dogecoin, Solana, and Cardano) that should have been handled as licensed securities.
