Bad day for Binance with SEC investigation and Reuters exposé

Bad day for Binance with SEC investigation and Reuters exposé

Bloomberg reported that the United States Securities and Exchange Commission is looking into whether Binance Holdings violated securities regulations when it launched its BNB token in an Initial Coin Offering (ICO) five year ago. Bloomberg reported June 6.

Binance is the largest cryptocurrency exchange in the world, while BNB is the fifth-largest.

The BNB ICO was held on July 2017, across several platforms, at the height of the so called ICO boom. Binance opened just days later. Bloomberg reports that at least one U.S. resident claimed they took part in the ICO. This could prove to be a significant fact in an SEC case if the agency chooses to pursue one. SEC claimed that most cryptocurrencies were securities and filed cases against a variety of ICO projects.

Changpeng Zhao (Binance founder and CEO), also known as CZ, stated in a 2020 post that the BNB whitepaper’s wording was modified in January 2019. This was because the “potential for being misunderstood in certain regions as a security” was higher. Binance.US was established later in the year.

Related: Binance wins dismissal from class action for 2018 tokens that failed

Reuters also published a long special report on May 6 alleging that Binance processed $2.35 BILLION of transactions involving hacks, investment frauds and narcotics sales, and had poor KYC/AML protections during those years.

Reuters also mentions Eterbase hacking, where some proceeds were laundered through Binance, North Korean hacker group Lazarus. Binance’s association to Russian-language drug mart Hydra is another example.

Binance’s spokesperson disputed Reuters’ findings. Forbes was told by the exchange that the report was a “woefully misleading op-ed” that used outdated information from 2019 as well as unverified personal attestations.

Binance has been the subject of numerous U.S. federal investigations. This includes another SEC investigation. The U.S. Commodity Futures Trading Commission began an investigation into the trading practices of Binance last year.

After a review of operations in the United Kingdom, Binance Markets was ordered by Financial Conduct Authority (FCA), to stop all activities there. Binance Markets was also ordered to stop operations in Ontario in June last year, though it was still active there until March this year.

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