SEC Investigates Binance Over ICO of BNB Token

Regulators are looking into whether Binance’s selling of digital tokens when it was getting off the ground in 2017 broke securities rules, sources told Bloomberg, according to a Monday (June 6) report.

The Securities and Exchange Commission (SEC) is looking into the origins of the firm and its BNB token, now the fifth largest in the world.

Regulators want to see if the 2017 initial coin offering (ICO) came out to a violation of securities rules, when it should have been registered with the agency. The report noted that the SEC has leveled dozens of enforcement actions of ICOs, which involve issuing virtual coins to raise money.

Additionally, BNB has been a central part of Binance’s rise in popularity in the crypto world. The report said the scrutiny of BNB’s beginnings could be more trouble for Binance, which is already in the throes of several other investigations.

According to Binance, it wouldn’t be “appropriate for us to comment on our ongoing conversations with regulators, which include education, assistance, and voluntary responses to information requests,” the report said. However the company said it plans to keep working with regulators and meeting requirements set by them.

PYMNTS previously reported that Binance had hired two law experts to help with its regulatory and market compliance. The professionals included Seth Levy, a former executive with Citadel LLC and the U.S. Financial Industry Regulatory Authority, and Steven McWhirter, who used to work with the U.K. Financial Conduct Authority.

Read more: Binance Bulks Up Regulatory Team

Levy was hired as “head of market surveillance” and McWhirter became director of regulatory policy.

“Regulation is regarded as an important and necessary component in the lifecycle of all innovative sectors,” McWhirter said in a statement in April. “My efforts will support Binance by ensuring that the regulatory global compliance is enhanced in tandem with crypto and blockchain innovation.

“Leading Binance’s regulatory policy team will allow me to leverage my experience as a former conduct regulator to create a sustainable crypto ecosystem with consumer protection and market integrity at its heart.”