SEC launched investigation into the BNB token

What’s new? The US Securities and Exchange Commission (SEC) has launched an investigation into cryptocurrency exchange Binance and its native token BNB. The regulator intends to find out whether the platform violated the rules for the sale of securities in the 2017 initial public offering of BNB, Bloomberg reports, citing its own sources.

Bloomberg’s material

Details of the case. Before the launch of BNB in 2017, Binance published a White Paper which stated that 85% of the funds raised in the initial coin offering (ICO) would be used to build and promote the exchange.

A White Paper is a document that describes the concept of the project and its roadmap.

It also became known that the SEC will begin an inspection of Binance.US, an American affiliate of the exchange, on the subject of whether its activities are correctly separated from the global company. The regulator declined to comment on the case.

How does the SEC classify securities? A digital asset may fall under the regulator’s supervision if investors bought it to fund a company for profit. This definition is based on a 1946 US Supreme Court decision, which enshrined the definition of an investment contract. If tokens fall under the definition, they must also be registered with the SEC.

Opinion of Binance representatives. In a statement, the exchange said: “it would not be appropriate for us to comment on our ongoing conversations with regulators.” The company added that Binance works with the authorities and will continue to comply with all requirements set by regulators. In this, the exchange’s representatives stressed that Binance and Binance.US are separate legal entities.

Earlier, SEC chief Gary Gensler said that most digital assets should be classified as securities. He explained that many cryptocurrencies attract entrepreneurs “raising money from the public in anticipation of profits.”

At the end of May, CryptoLaw chief John Deaton warned Elon Musk about the possible consequences of the meme cryptocurrency Dogecoin (DOGE) promotion. He suggests that the SEC may recognize DOGE as security and link the asset to Tesla and SpaceX. In December 2020, the SEC accused Ripple of selling unregistered securities under the guise of XRP tokens.