BNB, the native token of Binance has caught the attention of US’ Securities and Exchange Commission (SEC), that has launched an investigation to check if its launch was legit or not. The SEC wants to make sure that in 2017, when the BNB token was put up for initial coin offering (ICO), it was not an unregistered security. The BNB token in primarily used to pay transaction fee on Binance crypto exchange, that is among the biggest in the world.
Reacting to this legal hurdle, the Binance team has said that it has and will continue to adhere to the rules and regulations of the nations it’s operating in.
“As the industry has grown at a rapid pace, we have been working very diligently to educate and assist law enforcement and regulators in the US and internationally, while also adhering to new guidelines. We will continue to meet all requirements set by regulators,” Engadget quoted a Binance spokesperson as saying in an email.
The SEC is trying to identify those ICOs that were not registered with it before going live.
ICOs provide individuals with an opportunity to invest in Web3 projects at an early stage that have the potential to offer huge returns after their launch.
While ICO investors could end up reaping in big rewards after the launch of the product is successful, they could just as easily fall prey to scam projects and end up losing their investments.
In a bid to safeguard US citizens from getting duped by crypto scammers, the SEC mandates that all ICOs are first registered with the federal agency, before being made live.
The Binance token is undergoing this investment now.
In addition, the SEC will also be probing if Binance US, a subsidiary of Binance Global, is an integrated or separate entity in-relation with its mother organisation, the Engadget report noted.
Founded in 2017, Binance has reportedly processed $2.35 billion (roughly Rs. 18,257 crore) in illegal transactions linked with hacks, drugs, and other fraud activities, a Reuters report said.
The Binance team has however, refuted the claims made by Reuters calling the information ‘rife with falsehoods’.
While the SEC is beginning to investigate Binance’s operational ethics, the company is aiming to become the most licensed crypto exchange in the world.
Earlier this year, Binance US officially received approvals to operate as a money transmitter in Puerto Rico. The US-focussed subsidiary of Binance Global also has similar licenses in other American states like Wyoming, Connecticut, and West Virginia as well as in Dubai and Abu Dhabi.
The platform is currently in talks with Italian regulators to bag similar licenses there as well.
Amid the internationally prevailing uncertainties around the Web3 industry, Binance is working to sharpen its legal team on a global level.
In May, Binance US roped-in Krishna Juvvadi as the vice president and head of its legal team. The Indian origin official has previously served as a trial attorney at US’ Department of Justice (DoJ) and as the global head of operations compliance at Uber.
The platform is looking to onboard legal personnel in Israel, Canada, UK, Portugal, Spain, Italy, Hong Kong, Singapore, and other regions of the Asia-Pacific, Europe, Middle East, Africa, and Latin America.