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The investigation comes amid a separate report by Reuters alleging Binance facilitated $2.35 billion in illicit funds between 2017 and 2020
US regulators are reportedly probing Binance over its 2017 initial coin offering (ICO), adding additional pressure to the embattled exchange currently facing accusations of having facilitated billions in illicit funds in recent years.
The world’s largest crypto exchange by trading volume is in the SEC’s spotlight over allegations it may have failed to register its token as a security with the agency. The agency is determining if a possible breach of US securities laws occurred.
Bloomberg first reported the news Monday, citing people close to the matter who wished to remain anonymous due to the confidential nature of the ICO investigation. Blockworks attempted to contact the SEC but did not receive a reply by press time.
The SEC is also reportedly looking at market-making companies connected to Binance CEO Changpeng “CZ” Zhao whose ownership stakes of market makers on Binance.US have piqued the regulator’s interest, Bloomberg reported. Binance.US and Binance are separate entities.
“We have been working very diligently to educate and assist law enforcement and regulators in the US and internationally,” a Binance spokesperson told Blockworks while not commenting directly on the probe. “We will continue to meet all requirements set by regulators.”
Public ICOs were a popular crowdfunding method in bygone years designed to raise funds for budding crypto projects and ecosystems. They have since fallen out of favor following legal uncertainty.
Binance raised $15 million over the course of 16 days from its ICO listing five years ago where it sold binance coin (BNB) for $0.15 each to the public as an ERC-20 token on the Ethereum blockchain. BNB was last seen changing hands for around $283, down 19.86% year to date, according to Messari data.
Bloomberg’s reporting comes amid a separate report by Reuters on Monday alleging Binance processed $2.35 billion in illicit transactions between 2017 and 2020 which are said to have derived from hacks, fraud and the illegal sale of drugs.
Reuters has leaned on two industry experts as well as a 2020 report by blockchain analytics firm Chainalysis to arrive at its multi-billion dollar figure. Blockworks attempted to contact Chainalysis to corroborate but did not receive a response by press time.
It’s the latest string of accusations facing the exchange which landed in regulatory hot water last year over its alleged failure by regulators to appropriately register its business in jurisdictions such as the UK, Italy and Singapore. Binance has no official headquarters.
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