Bloomberg reported on Monday that the U.S. Securities and Exchange Commission (SEC) has opened an investigation against Binance. The leading cryptocurrency exchange platform company is once again in the crosshairs of the U.S. justice system, which suspects that the initial release of its token, the BNB, violated securities law.
Binance was already on the SEC’s radar
In September 2021, the Commodity Futures Trading Commission, the federal body responsible for regulating the derivatives markets, had already opened an investigation into whether employees of the platform had committed insider trading and manipulated the markets with inside information.
In addition, 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).
It doesn’t stop there, last February, the SEC attacked Binance’s CEO, Changpeng Zhao, on suspicion of sharing confidential information with two American companies, Merit Peak Ltd and Sigma Chain. These “market makers” carry out transactions on a continuous basis on the Binance US platform and, by doing so, limit price volatility, according to the Wall Street Journal. The US regulator wants to scrutinize the nature of the ties between these two firms and the CEO of Binance following the revelation in 2019 of corporate documents that would testify to their proximity.
Another blow to Binance
This week, the SEC took another shot at the leading cryptocurrency exchange platform. The federal agency, which beefed up the capabilities of its crypto unit in early May, is determined to scrutinize the industry. This time it is questioning the legality of BNB’s 2017 ICO. The initial offering of the token may indeed have violated securities law. According to the latter, Binance was required to register the asset with U.S. 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 this new lawsuit. Instead, in a blog post promoted on Twitter, the platform refuted, this Monday, the accusations of money laundering it is facing. It also claims that, citing a study conducted by Chainalysis, only 0.15% of cryptocurrency transactions could be related to illegal activities. It also assures that it has one of the most sophisticated anti-fraud systems on the market and recalls, in its words, an “inconvenient truth”: the vast majority of money laundering would take place via the traditional banking system.
Following the opening of this new investigation by the SEC, the price of BNB fell by 11% in just over 24 hours, slipping below its key support level of 280 dollars. However, it is worth noting that other major crypto-currencies have also suffered significant falls over the same period of time.
