BNB, a security? The US Securities and Exchange Commission is currently dealing with the issue. Noisy Bloomberg investigate the Securities and Exchange Commission (SEC). binance on suspicion of the unauthorized issue of securities. Accordingly, investors acquired the token at the ICO (Initial Coin Offering) in 2017 with expected returns that were linked to the growth of the company. In this case – according to the SEC – BNB is a security token and binance should have registered the sale with the authorities.
Binance launched BNB five years ago, at a time when the crypto hype was experiencing its first peak. Zig ICOs were carried out, many knitted with hot needles. The token, then renamed Binance Coin and now Build and Build, was marketed as an investment in the company, according to the SEC. Thus, the stock exchange regulator argues, BNB is a security.
“Every ICO is a securities issue”
The ICO wave in 2017 operated in the regulatory gray area. Whether security, i.e. securities, or not is tested in the so-called “Howey Test” – a framework from 1946. However, the application to crypto assets is tricky, and the line between means of payment and securities is extremely fine.
The SEC’s stance, however, is clear. SEC Chairman Gary Gensler explained at Aspen Security Forum 2021: “I think every ICO I’ve seen is a security issue”. According to Bloomberg, the authority has now launched “dozens” of investigations into ICOs.
The case against the world’s largest crypto exchange not only creates a precedent. It also has great symbolic value. With a market capitalization of $46 billion, BNB is now the fifth largest coin on the crypto market. A BNB currently costs 280 US dollars – nine percent less than the day before.
Pressure on Binance increases
The next few months are likely to be tough for Binance. Don’t expect a quick result. “The investigation is likely months from completion,” an insider told Bloomberg.
The similar case of Ripple shows that months can quickly become years. The company behind the cryptocurrency XRP was sued by the SEC back in December 2020. Here, too, the accusation is: unauthorized securities trading. There is still no end in sight to this legal dispute.
Market manipulation, money laundering, insider trading: Binance accompanies a number of other procedures. Due to the lack of prospectuses, Binance has already been reprimanded by BaFin. The exchange had to stop derivatives trading in Germany in the summer of 2021, as well as other services in countries such as Great Britain, Japan and Canada.
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