Bloomberg reported, for example, that the United States Securities and Exchange Commission was investigating whether Binance Holdings violated securities rules when it released its token to the BNB at the initial coin offering (ICO) five years ago.
In July 2017, BNB’s ICO took place on a few platforms during the height of the ICO boom, and the Binance exchange opened a few days later. According to Bloomberg, citing unnamed people, at least one U.S. resident claims to have participated in the ICO. It could be decisive for an SEC investigation if the agency chooses to prosecute one. The SEC claims that many cryptocurrencies are securities and has filed lawsuits against many ICO projects.
Binance founder and CEO Changpen Zhao, known as “C.Z.,” said in a blog post in the middle of 2020 that the wording of the BNB White Paper was modified at the beginning of 2019 because “the potential to be misunderstood as security is higher in certain regions.” Binance’s U.S. division, Binance.US, was established later that year.
Reuters has published an extensive special report alleging that Binance processed at least $2.35 billion in hacking, investment fraud, and drug sales between 2017 and 2021 and had weak “Know Your Client” protection and protection against money laundering during those years.
Among other cases, Reuters mentioned the hacking of Eterbase, as part of the proceeds were laundered through Binance by the North Korean hacker group Lazarus and Binance’s association with the Russian-language drug cartel Hydra.
A Binance spokesman challenged Reuters’ findings, saying that the report was “a misinformed article that uses outdated 2019 information and unverified personal allegations.”
Binance is the subject of numerous U.S. federal investigations, including another SEC inquiry. The U.S. Commodity Futures Trading Commission began analyzing stock exchange trading practices last year.
Also, investors have filed a class-action lawsuit against Binance’s U.S. division, Binance.US, for falsely advertising investments in the TerraUSD (UST) algorithmic stable coin as “safe.” Last month, UST’s stablecoin algorithm lost its hold on the U.S. dollar and collapsed with its associated asset Terra (LUNA), wiping out $ 40 billion in market capitalization. Investors who filed in the U.S. District Court in Northern California also claimed that Binance.US was misleadingly advertising UST as “backed by Fiat.” Investors claim: Binance.US does not comply with federal and state securities laws. Binance.US failed to disclose that UST is, in fact, security and that it sells these securities. However, there is no registration declaration for them, and Binance.US refused to register with the U.S. Securities and Exchange Commission as a stock exchange or broker-dealer.
Binance Markets, the U.K. branch, was ordered by the Office of Financial Conduct to cease operations in the county following an inspection of its operations last year. In addition, Binance was ordered to cease operations in Ontario last June, although it remained active in the Canadian province until March this year. In a statement, Binance said, “it would not be appropriate to comment on our ongoing talks with regulators, which include assistance, education, and voluntary responses to requests for information.”
The company also stated that it works with the authorities and will continue to comply with all regulatory requirements. How did the BNB token perform in the first 24 hours after the accusations?
The spotted trading volume in these 24 hours was at 78.29%. With a price decline, this only indicates one thing; investors are selling off the BNB token in their numbers. At $46.28b at press time, the market capitalization of the BNB token also saw about an 8% decline in these 24 hours. The price charts revealed that the token has struggled to keep the bears away for the past 24 hours. Quite tricky times are ahead for Binance, which will inevitably lead to a shift in market layers. It will possibly be a long-drawn legal battle between Binance and the SEC.