SEC Tightens Noose Over Binance As It Investigates The Latter’s 2017 ICO Sale

US regulator SEC has now directed its attention to the world’s largest crypto exchange Binance to examine if its 2017 initial coin offering [ICO] for its BNB token is in violation of the securities rules that require prior registration with the agency.

In more troubling news, the platform currently faces multiple investigations in Washington. Sources closed to the matter revealed that the SEC has brought dozens of enforcement actions over ICOs, which involve issuing virtual coins to raise money.

Following the investigation, Binance released a statement saying, “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.”

The firm added that it would be assisting the authorities and “we will continue to meet all requirements set by regulators.” 

Apart from BNB, the SEC is also probing possible trading abuses by the firm’s insiders and also investigating its American affiliate- Binance.US, formed in 2019. 

More Scrutiny Awaits Binance

The crypto exchange however maintained that Binance.com and Binance.US “are separate entities.” “The US branch is a separate trading platform that services US users by offering products and services that are compliant with US federal and state regulations,” the firm said.

In a separate statement, the US’s arm said it was “committed to upholding the highest standards of compliance.”

Anonymous experts sources said the SEC is also monitoring market-making entities linked to the founder Changpeng Zhao, commonly known as “CZ”.

Will Binance Meet Ripple’s Fate?

The latest development has raised concerns of Binance meeting a similar fate to that of Ripple Labs Inc., which is currently engaged in a bitter court battle with the SEC after the regulator sued the firm and two of its executives in December 2020 for allegedly breaking rules in selling a crypto token known as XRP.

In its defense, Ripple emphasized that its token acts as a medium of exchange for digital currency rather than a security, and called the SEC’s litigation flawed.

U.S. Securities and Exchange Commission chair Gary Gensler has been taking aim at crypto exchanges by asserting that most digital assets fall under the purview of the SEC and crypto trading platforms should be registered with the agency.

Lipika Deka: Lipika is a crypto-journalist at TWJ. A graduate in economics and finance, she has a keen interest in the political and socio-economic facets of blockchain technology and the cryptocurrency industry.