Binance is under investigation by SEC over its BNB token

SEC confirmed two probes into Binance’s BNB ICO, while Reuters provided evidence that at least $2.3b worth of funds have been laundered through the leading crypto exchange.

A stock photo of judge's gavel and bitcoin.

The Securities and Exchange Commission is examining whether BNB 2017 initial coin offering falls under the definition of an unregistered security. BNB can be deemed a security if it passes the Howey test, meeting all four prongs of ​​being an investment of money, (2) in a common enterprise, (3) with the expectation of profit, and (4) to be derived from the efforts of others. The investigation puts Binance in a similar position as Ripple and, previously, Telegram.

Apart from BNB ICO, SEC is also investigating possible insider trading on Binance and whether its American affiliate Binance.US is truly independent of the parent company. Meanwhile, Binance’s CZ is trying to find a positive side to the SEC’s probe.

“It would not be appropriate for us to comment on our ongoing conversations with regulators, which include education, assistance, and voluntary responses to information requests,” Binance said in a statement, refusing to provide further details on the legal battle with SEC. “We will continue to meet all requirements set by regulators,” the company added.

In their June 6 special report, Reuters accused Binance of serving as a “hub for hackers, fraudsters and drug traffickers” with links to Russia-based darknet marketplace Hydra, which was closed by German authorities in April. Binance refuted claims, pointing out that the exchange helped recover $5.8 from the Ronin hack and assisted in multiple fraud cases.