Binance.US is under a strict scrutinizing phase by The United States Securities and Exchange Commission (U.S. SEC). According to the U.S. SEC, Binance Holdings Ltd. (BNB) has broken the securities rules during its Initial Coin Offering (ICO) five years ago. The US regulators say that Binance sold digital tokens in order to raise funds during the ICO procedures in the year 2017. Some people familiar with the matter testified against the Binance to the SEC, according to Bloomberg’s reports.
The Securities and Exchange Commission (U.S. SEC) will go to frisk the firm’s entire origination along with those of Binance native token BNB. Currently, BNB is the fifth-largest cryptocurrency in the world. The investigators will examine whether the initial coin offering in 2017 based on the sale of securities took place without registering with the agency. The confidential information was shared by some people (under anonymity) who might have bought the assets during ICO proceedings.
Currently, Binance is facing a troublesome experience with the ongoing investigation in Washington. Also, the SEC has implied multiple enforcement actions over ICOs which involves issuing of virtual tokens to raise the funds.
Not only this, according to the latest Reuters publication a report was presented alleging Binance processed more than $2.35 billion of transactions. These transactions include hacks, fraudulent investments, sale of narcotics and drugs between 2017 and 2021. Moreover, the report says that during these years the largest cryptocurrency exchange Binance had poor KYC (Know Your Customer) and AML (Anti-Money Laundering) norms.
Further to this, Reuters has described the hacking of Eterbase. It shows that how the North Korean Lazarus Group facilitated the hack through Binance. While the hacking group stole cryptocurrencies from the popular Seychelles-based centralized crypto exchange Huobi, they also used Binance for a smoother outflow of funds.
Binance.com vs Binance.US
Binance operates under various holdings around the world. While it functions in the United States as Binance.US, the United Kingdom branch is named as Binance Markets. Also, other intermediaries like Binance.com operates around the world and provide cryptocurrency exchange facility to multiple nations.
According to Binance, Binance.com and Binance.US are ‘separate entities’ whereas Binance.US is for US-based retail and institutional investors. Moreover, it complies with US federal and state regulations for offering products and services to its customers.
According to the Bloomberg reports, the SEC investigates the US branch of Binance for its complete distinction from its counterparts. Along with SEC, The IRS (Internal Revenue Service) and the Department of Justice are analyzing deep at Binance’s insights and its business. Similarly, the Commodity Futures Trading Commission (CFTC) has issued an inquiry for Binance allowing US citizens to trade through its platform.
Last year, Binance Market, the United Kingdom branch, was summoned by the FCA (Financial Conduct Authority) to end the trading practices. Additionally, Binance was forced to cease its operations in the Canadian province of Ontario followed by a regulatory breakdown in June 2021. But Binance continued its operation in other Canadian provinces like Alberta.
Will Binance.US be the new U.S. SEC target like Ripple?
The U.S. SEC is currently in a battle with the US-based cryptocurrency exchange Ripple and its two executives in December 2020. The legal actions taken against Ripple are for allegedly selling unregistered securities. During the announcement made by the U.S. SEC on filing a lawsuit against Ripple stated,
We allege that Ripple, Larsen, and Garlinghouse failed to register their ongoing offer and sale of billions of XRP to retail investors, which deprived potential purchasers of adequate disclosures about XRP and Ripple’s business and other important long-standing protections that are fundamental to our robust public market system.Stephanie Avakian, Director of the SEC’s Enforcement Division
Likewise, Binance’s BNB is in the same position just like XRP is in for the past 18 months. Any findings that BNB is security can put Binance into the ocean of court battles in the long run. Although, the newly appointed Chairperson of the SEC Gary Gensler has made clear that all the ICOs are securities and should be regulated by the SEC firsthand.
Meanwhile Binance CEO ‘CZ’ on Money Laundering Myths
Meanwhile, Binance CEO Changpeng Zhao, popularly known as ‘CZ’ has debunked all the FUDs. Recently, Binance has released 50-page email records between its cyber security team and journalists related to crypto attacks and money laundering. CZ mentions them as ‘cherry-picking, misleading, and time-wasting journalists’ who only want wrath in the system instead of smoother operations.
In the reports, he mentions the misleading details and information propagated by the parties have resulted in critical harm to the organization. He strongly focuses on how the misleading news is not fact-checked and relies on poor data leading to massive mishaps. The crypto billionaire states that The United Nations has realized that about $800 billion to $2 trillion in US dollars are associated with illicit activity and money laundry. These figures are roughly 2% to 5% of the current circulating global traditional fiat currency. Whereas, ‘Crypto’ is as transparent as a clear glass than the traditional cash economy because of strong and secure digital documentation.