The US Securities and Exchange Commission has launched an investigation into Binance to determine whether the company’s sales of the BNB token qualify as a securities sale. According to reports, the investigation seeks to determine whether BNB was treated as unregistered securities when Binance held its Initial Coin Offering (ICO) in 2017.
The authorities in the United States are stringent on issuing securities, as companies must first obtain approval from the SEC. US regulators are investigating if Binance violated the regulations when it issued its BNB tokens.
If the US SEC can prove that laws were broken, Binance may be required to pay a fine based on precedence in similar situations. Binance Coin, or BNB, is the native token of Binance and is used to pay fees on the crypto exchange.
This is not the first time Binance has faced a probe from the US SEC. In February, they launched an investigation to probe the relationship between the exchange, its CEO, Changpeng Zhao, and two trading firms.
The firms are Merit Peak Ltd. and Sigma Chain AG, and their function as market makers includes purchasing and selling cryptocurrencies through Binance’s US branch, thereby reducing price volatility. The SEC is investigating whether Binance appropriately discloses its relationship with both firms.
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