SEC Launches Investigation On Binance’s BNB Token To See If It Is A Security• June 6, 2022 7:25 pm • Comments
Just like what happened to XRP, the SEC just announced that it has now started an investigation on Binance’s BNB token to determine whether or not it is considered a security.
Binance’s BNB token had its initial coin offering (ICO) back in 2017 and the agency is now determining whether or not it should have been registered with the agency.
So far, Binance has not provided any specific comments or responses to the SEC’s recent action and has stated that it will attempt to comply with all law enforcement agencies.
Due to this new announcement, the price of BNB has already started to decline as it was reported that it dropped roughly 4% after the news came out.
— R6 ❤️🔥 (@r6kimry) June 6, 2022
SEC chair Gary Gensler has been vocal in his concern that platforms may be hosting tokens that could be classified as securities, but his comments have focused more on taking exchanges to task for hosting unregistered securities than going after projects themselves, as previous SEC regimes did during the ICO boom.
Binance has faced scrutiny from a variety of US regulators in recent months.
The SEC is also reportedly investigating the exchange’s US arm, Binance.US, to ensure it’s appropriately differentiated from its global counterpart.
The Internal Revenue Service and Department of Justice are also taking a closer look at Binance to gain insight into its business, and the Commodity Futures Trading Commission (CFTC) has also reportedly launched an inquiry into whether Binance allowed US residents to trade on its platform.
Currently, the BNB token is ranked the 5th largest crypto token when measured by total market cap and followers Bitcoin, Ethereum, Tether, and USDC.
The success of the token may be a reason why the SEC has decided to target the crypto as it seems strange that the SEC would take action 5 years after the coin’s ICO.
Many investors are already comparing this to the current XRP lawsuit that the SEC initiated back when XRP was considered the second largest crypto by market cap.
The SEC’s actions against XRP was also many years after XRP’s ICO which makes BNB’s situation very similar.
As you may (but probably don't) recall, the Binance token got the HIGHEST danger rating in the Legal Briefs' "SEC danger rating" videos last year.
8.5 out of 10.
— Jeremy Hogan (@attorneyjeremy1) June 6, 2022
The U.S. SEC has launched legal actions against crypto-based companies for allegedly selling unregistered securities.
Most notoriously, the Commission is currently in a legal battle against payment company Ripple and two of its executives for this reason.
The legal battle is yet far from over, but recent developments don’t seem to favor the regulator. In that sense, legal expert Collins Belton commented the following on the probe against Binance Coin (BNB):
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.
The way this turns out is still to be determined, but investors can be sure that the SEC probably isn’t doing this to “protect” them.
The initial reports indicate that the SEC is going after BNB for the ICO rather than the token itself being security.
Looks like they know calling XRP a security was a big mistake!
— mickle.xrp ✪ (@MarketsMickle) June 6, 2022
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