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Binance was founded in 2017, and in July of that year, it launched its native token through an Initial Coin Offering (ICO) (ICO). Binance Coin (BNB) was distributed among early backers, angel investors, and the exchange’s core team.
The token was sold for 15 cents during its public sale, helping Binance raise approximately $15 million in funds. The funds were used to improve the platform, growth, marketing, education, etc.
According to Bloomberg, the Commission is investigating whether Binance should have registered BNB as a security and whether the ICO constitutes the illegal sale of an unregistered security. The token is currently one of the most popular coins in the world, ranking fifth in terms of market capitalisation.
At the time of writing, Binance Coin (BNB) is trading at $295, having lost 2% and 4% over the past 24 hours and 7 days, respectively. The token has a market capitalisation of over $48 billion, making it the third largest token without counting stablecoins Tether (USDT) and USD Coin (USDC) and seems to be negatively reacting to the news.
BNB with minor losses on the 4-hour chart. Source: BNBUSDT Tradingview
Additional information claims the Commission may also be proving Binance.US, Binance’s subsidiary, to determine if the company is separate from its parent company’s business. Binance has yet to issue an official statement regarding the investigation.
Binance is also facing charges from Bitcoinist for enabling as much as $2.3 billion in money laundering through its platform. The crypto exchange platform quickly refuted these allegations and emphasised its role in assisting law enforcement agencies in preventing criminals from using its platform for illegal purposes.
Binance Coin (BNB) The New XRP?
The U.S. SEC has filed lawsuits against crypto-based companies for allegedly selling unregistered securities. The Commission is currently in a legal battle against payment company Ripple, and two of its executives, for this reason, appear to be in the regulator’s favour. Legal expert Collins Belton commented on the Binance Coin (BNB) investigation:
“It’s been 5 years and it’s mcap is higher than most US companies, why wait this long to take potential action if you’re concerned about potential harm? Letting things balloon only to prick it once massive seems like a recipe for inducing consumer harm rather than staving it off.”