SEC to Investigate if Binance ICO Broke Securities Laws

Updated by Geraint Price
In Brief
  • The SEC is reportedly investigating whether Binance violated securities laws in 2017.
  • Neither the SEC nor Binance has officially confirmed the investigation.
  • Lawmakers are increasingly taking action against crypto projects to ensure regulatory standards are met.
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The United States Securities and Exchange Commission (SEC) is investigating whether Binance violated securities laws with its initial coin offering (ICO) in 2017. 

Sources told Bloomberg that the SEC is evaluating if the ICO should have undergone registration processes.

Binance offered a response to the report saying that it was focused on meeting compliance and regulatory standards.

“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. We will continue to meet all requirements set by regulators,” a spokesman said.

BNB is the fifth-largest token by market cap, with a total capitalization of $45 billion. The exchange is currently facing scrutiny from regulators across the world and could be in for a tough near-term future.

Binance.US has also appeared on the radar of authorities, with the SEC probing its trading affiliates. It is also being investigated by the U.S. Justice Department, the Commodity Futures Trading Commission, and the Internal Revenue Service.

This is not the first time that the SEC has examined securities violations of a particular token. It filed a lawsuit against Telegram and its token for similar reasons, leading to the token’s demise.

It is also currently in a protracted battle with Ripple over its XRP token, with the latter vehemently denying that it broke any securities laws.

Binance stepping up the regulation game

There has been no shortage of inspections of Binance’s operations in recent years. The exchange has been taking steps toward being more compliant with regulations, hiring a former treasury investigator as its global anti-money laundering chief last Aug. 

It has opposed the idea that crypto is a haven for money launderers and criminals, saying in a blog post that “the overwhelming majority of all money laundered goes through the traditional banking system, not crypto.”

Multiple reports have been released on the activity taking place on Binance. Reuters investigated the transactions taking place on Binance and reported bad actors used the exchange to launder $2.35 billion in illicit funds. It also said that Binance had no idea who was moving money through the exchange.

Nonetheless, it has been keen on appeasing lawmakers. The exchange recently said that it would work closely with Malaysian crypto exchanges in a bid to boost the crypto market in the country while adhering to regulations.

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