The U.S. Securities and Exchange Commission (SEC) is investigating whether Binance’s BNB token was a security at the time of its sale in 2017, Bloomberg reports citing sources.
Binance Coin (BNB) was launched in July 2017. Initially it was a ERC-20 token on the Ethereum blockchain. In April 2019 the asset migrated to its own blockchain.
In the ICO, 100 million BNB were sold at $0.15. Of the total supply of 200 million tokens, 10% went to business angels and 40% were reserved for the founders’ team.
In the white paper there were no restrictions on participants of the token sale. According to Bloomberg, the regulator is aware of at least one US citizen who bought BNB during the initial sale. This allows the SEC to establish its jurisdiction to review the ICO for possible violations of US securities laws.
Sources noted that the investigation does not necessarily lead to lawsuits and could take months.
Binance said they do not consider it appropriate to comment on ongoing communications with regulators, which include education, assistance and voluntary responses to information requests.
The Commission is separately examining the activities of Binance’s US unit regarding insider trading and the activity of market makers associated with founder Changpeng Zhao.
“Binance.US is a separate US-focused trading platform that serves local users, offering products and services that comply with US federal and regional rules,” the company said.
In the wake of the news, BNB fell around 8% in 24 hours to about $281.
Reuters analysts estimated that, from 2017 through 2021, criminals laundered through Binance at least $2.35 billion of funds obtained illegally.