Suspected of money laundering, SEC investigating BNB? Binance responds one by one

Binance is in trouble and has been accused by Bloomberg and Reuters.

According to Bloomberg, the U.S. Securities and Exchange Commission has launched an investigation into BNB, the native token of the cryptocurrency exchange Binance.

The SEC is investigating whether the founder of Binance, the world's largest cryptocurrency exchange, Zhao Changpeng, engaged in an unregistered sale of securities during the sale of BNB tokens during the initial coin offering (ICO) in 2017, the report said.

In May, SEC Chairman Gary Gensler asked lawmakers to increase the agency's enforcement budget as it aims to require cryptocurrency trading platforms to register with the SEC. According to the SEC's definition, many cryptocurrency trading platforms are trading securities, not commodities, and therefore should be registered with the agency for regulation. According to a person familiar with the matter, the investigation involving Binance Coin may take several months to conclude, and regulators may not prosecute companies or individuals. But if the U.S. SEC does consider BNB to be a security, it means Binance must comply with the agency's regulatory and registration requirements.

Binance responded to Golden Finance: "As the industry develops rapidly, we have been working hard to educate and assist law enforcement and regulators in the United States and internationally , while also following new guidelines. We will continue to meet all requirements of regulators. "

In fact, as early as 2019, Binance has been deliberately distinguishing itself from security tokens. In April 2019, Binance revised its white paper and deleted the word "buyback". The original version of the clause "the company will use 20% of its profits to buy back and destroy BNB every quarter" was changed to "the company will destroy BNB based on Binance trading profits every quarter" to clear its securities attributes. A hot topic tag #UseBNB also appeared on Twitter to try to explain that BNB is a utility token rather than a security token.

Nevertheless, if the SEC determines that BNB is a security, it may also put Binance in a similar situation to Ripple Labs Inc. In December 2020, Ripple was sued by the SEC, and the focus of the argument was that "XRP is a security rather than a token." Affected by this incident, XRP experienced a delisting storm and was involved in a long-lasting court dispute with the SEC.

Not only is it suspected of selling unregistered securities, Reuters recently reported that an investigation into Binance's financial activities showed that the exchange platform assisted in laundering no less than US$2.35 billion in corrupt funds in five years.

In response to the alleged money laundering, Binance said: “Ignore the authors and experts who cherry-pick data, rely on unverifiable “leaks” provided by regulators, and fuel crypto paranoia for reputation or financial gain. Instead, just look at the facts. Neither our industry nor Binance is perfect, but we have made great strides in the past three years. Encryption is a brand new innovation. Like many regulators and policymakers, we are still studying what the appropriate regulatory framework should look like . According to Chainalysis, a blockchain analysis company specializing in encryption and blockchain analysis, 0.15% of all transactions using cryptocurrencies in 2021 were related to some type of illegal activity. The United Nations estimates that 2% to 5% of traditional fiat currencies (cash), about $800 billion to $2 trillion in current US dollars, are related to some type of illegal activity. It is well documented that cryptocurrencies are very transparent, more transparent than the traditional cash economy. "

Affected by the volatility in the cryptocurrency market, the SEC investigation, and reports of suspected money laundering, BNB has fallen by more than 8% in the past 24 hours and is currently quoted at $280.

It’s worth noting that Binance has indeed faced scrutiny from various U.S. regulators in recent years.

It is reported that in the Terra collapse incident, the United States is preparing to initiate a large-scale arbitration against Binance, Gemini, Kraken, and Coinbase for selling UST and LUNA to American customers according to securities laws. In February this year, the SEC also investigated the relationship between Binance.US and Zhao Changpeng's two trading companies (Sigma Chain AG and Merit Peak Ltd). In addition, the U.S. Department of Justice and the Internal Revenue Service are also paying close attention to Binance due to possible money laundering and tax violations.