Bloomberg reported on Monday that the US Securities and Exchange Commission (SEC) has opened an investigation against Binance. The leading cryptocurrency exchange platform company is once again in the sights of the US justice system, which suspects that the initial release of its token, BNB, violated securities law.
Binance was already on the SEC’s radar
In September 2021, the Commodity Futures Trading Commission, the federal agency responsible for regulating derivatives markets, had already opened an investigation into whether employees of the platform had engaged in insider trading and manipulated the markets with inside information.
Binance has also been the target of money laundering charges that have led to further joint investigations by the Department of Justice and the Internal Revenue Service (IRS).
In February, the SEC took aim at Binance’s CEO, Changpeng Zhao, on suspicion of sharing confidential information with two US companies, Merit Peak Ltd and Sigma Chain. These market makers trade continuously on the Binance US platform and in so doing limit price volatility, according to the Wall Street Journal. The US regulator wants to scrutinise the nature of the links between these two firms and the CEO of Binance following the revelation in 2019 of company documents that would testify to their closeness.
New blow for Binance
This week, the SEC again took aim at the leading cryptocurrency exchange platform. The federal agency, which beefed up the capabilities of its crypto unit in early May, is determined to scrutinise the sector. This time it is questioning the legality of BNB’s ICO in 2017. The initial offering of the token may indeed have contravened the Securities Act. Under the Securities Act, Binance was required to register the asset with the US authorities prior to any public sale. This is now a classic accusation in the cryptocurrency industry, with several other companies having been similarly investigated.
Binance has so far not reacted to the new lawsuit. Instead, in a blog post promoted on Twitter, the platform on Monday refuted the money laundering accusations against it. It also claims that, citing a study conducted by Chainalysis, only 0.15% of cryptocurrency transactions could be linked to illegal activities. It also claims to have one of the most sophisticated anti-fraud systems on the market and reminds us, in its words, of an “inconvenient truth”: the vast majority of money laundering is said to take place through the traditional banking system.
As speculation continues to arise regarding the connection between crypto and money laundering, we’d like to invite you to read this blog on how Binance is at the forefront of tackling global money laundering.https://t.co/2LKuhfWKVV
– Binance (@binance) June 6, 2022
Following the opening of this new SEC investigation, the price of BNB has fallen 11% in just over 24 hours, sliding below its key support level of $280. However, it is worth noting that other major cryptocurrencies have also suffered significant falls over the same period of time.
