SEC launches investigation against Binance’s BNB token

    08 Jun 2022

    The US Securities and Exchange Commission (SEC) is reportedly investigating whether Binance’s BNB token was a security during its sale in 2017. In recent months, Binance has faced scrutiny from a variety of US regulators.

    As Bloomberg reported on Monday, the SEC has launched a probe into the BNB token. The US securities regulator is taking a look at the early days of the exchange, examining whether the sale of its BNB token during a 2017 initial coin offering amounted to an unregistered sale of securities.

    SEC chair Gary Gensler expressed his concern that platforms may be hosting tokens that could be classified as securities, but his comments have focused more on taking exchanges to task for hosting unregistered securities than going after projects themselves, as previous SEC regimes did during the ICO boom.

    In recent months, Binance has faced scrutiny from a variety of US regulators.

    The SEC is also reportedly investigating the exchange’s US arm, Binance.US, to ensure it’s appropriately differentiated from its global counterpart. The Internal Revenue Service and Department of Justice are also taking a closer look at Binance to gain insight into its business, and the Commodity Futures Trading Commission (CFTC) has also reportedly launched an inquiry into whether Binance allowed US residents to trade on its platform.

    Although the SEC’s investigation into Binance’s initial coin offering seems all but confirmed, BNB’s relative stability may indicate that the crypto market isn’t particularly concerned.

    This is likely due to the SEC’s ongoing case against Ripple, which claims the XRP coin is a security rather than a commodity. Although the Ripple case has not yet concluded, the current consensus is that the SEC will likely lose, and XRP will not be deemed a security. If this scenario does indeed play out, it will set a powerful precedent that similar crypto coins should also be viewed as commodities instead of securities.

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