BNB , powered by Binance , is the fifth largest cryptocurrency on the market .
The United States Securities and Exchange Commission ( SEC ) has launched an investigation against Binance , one of the largest cryptocurrency markets in the world, due to a case related to the promotion of Binance Coin ( BNB ).
The SEC is examining the early days of the cryptocurrency , in an alleged breach of the token’s values in the early years of its expansion.
What about BNB?
According to Bloomberg , the SEC is investigating Binance due to the belief that it “broke the rules” of the commission by selling tokens during its launch in 2017.
Investigators are examining whether the 2017 initial coin offering amounted to the sale of a security that should have been registered with the agency, the people who were granted anonymity to discuss the confidential investigation said.
The SEC has launched dozens of enforcement actions over ICOs (initial offering rounds) , which involve issuing virtual currencies to raise money, a process the company did with BNB.
Binance told the outlet that “it would be inappropriate for us to comment on our ongoing discussions with regulators, which include education, assistance, and voluntary responses to requests for information.” The company added that it works with the authorities and “we will continue to comply with all the requirements established by the regulators.”
What is BNB?
The Binance Coin is a cryptocurrency promoted by Binance to support platform transactions, thus creating its own block chains (Binance Chain and Binance Smart Chain) for transactions with low costs in their fees.
BNB initially worked on the ERC-20 ethereum blockchain before becoming the native currency of the blockchain itself. To renew itself, it also changed its meaning to “Build and Build”.
Before the launch of BNB in 2017, Binance laid out its plans in a white paper (a project roadmap). The document said that its circulation would be limited to 200 million with half of the tokens sold through the ICO, which took place on multiple platforms around the world. Another $80 million would be reserved for Binance’s founding team, which includes its billionaire CEO, Changpeng Zhao.
In said document, Binance said that up to 85% of the funds raised in the ICO would be used to build and market the global Binance exchange. He did not mention restrictions on who could participate.
To attract investors, Binance has offered lower fees for merchants who pay with the token. He also paid many of his contractors in the currency, including at least one US resident. USA. who claimed to have bought BNB during the ICO, a detail that could be key for the SEC to step up to the investigation.
A finding that BNB is a security could put Binance in a position similar to that of Ripple Labs Inc., which is locked in a bitter court battle with the SEC after the regulator sued the company and two of its members. executives in December 2020 for allegedly breaking the rules in the sale of a cryptographic token known as XRP.