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The US Securities and Exchange Commission (SEC) is investigating the world’s largest cryptocurrency exchange by trading volumes, Binance. The SEC is looking into whether BNB was launched as a security during the Initial Coin Offering (ICO).
SEC launches investigation into Binance
Binance launched the BNB token through an ICO held in July 2017. The ICO happened on multiple platforms at a time when ICOs were booming. Following the ICO, the Binance exchange was launched. a Bloomberg report noted that at least one resident of the US participated in the ICO, attracting SEC scrutiny.
In 2020, the founder of Binance, Changpeng Zhao, announced that some changes were made to the BNB white paper in January 2019. The changes ensured that BNB would not be classified as a security in certain jurisdictions.
The charges filed against the BNB token correspond with the SEC’s views that most cryptocurrencies are securities. The SEC already has an ongoing case with Ripple, the creator of the XRP token. According to the SEC, XRP is a security, and Ripple executives are responsible for an unregistered securities offering.
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This is also not the first time the exchange has been entangled in an investigation with US federal investigators. The SEC has previously launched an investigation. The US Commodity Futures Trading Commission (CFTC) also started investigating Binance’s trading practices in 2021.
Last year, the UK Financial Conduct Authority (FCA) also launched a case into Binance. The FCA ordered Binance Markets to shut down and cease operations in the UK. Moreover, Binance was also ordered to halt its operations in June 2021. However, the company sustained active operations in the Canadian province until March 2022.
Reuter publishes a negative article on Binance
On May 6, Reuters released a report targeting Binance operations. The article said that the exchange processed $2.35 billion worth of transactions made from hacks, investment fraud, and narcotics sales from 2017 to 2021.
Reuters also said that Binance does not have strong anti-money laundering (AML) and know-your-customer (KYC) policies. The report further said that after the Eterbase hack, the North Korean hacking group, Lazarus, laundered the proceeds through Binance. The article also linked Binance with Hydra drug mart.
A spokesperson from Binance refuted the claims made by Reuters. The exchange further made a statement to Forbes saying that the Reuters report was a “woefully misinformed op-ed that uses outdated information from 2019 and unverified personal attestations.”
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