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Binance in the doghouse: SEC investigates exchange and BRB

By Monte Stewart


Updated

Binance logo on a smartphone
The US Securities and Exchange Commission is investigating the origins of the Binance cryptocurrency exchange and its digital coin, according to Bloomberg. - Photo: Getty Images

The Binance cryptocurrency exchange is in the US Securities and Exchange Commission’s doghouse, according to Bloomberg.

The wire service reported Tuesday that the SEC is investigating the creation of Binance’s holding company and its BNB cryptocurrency’s initial coin offering (ICO). The investigation dates back to 2017, when BNB was launched.

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Citing undisclosed sources, Bloomberg reported that US regulators are investigating whether Binance Holdings broke securities rules by selling digital tokens just as the crypto exchange was getting off the ground. BNB ranks as the world’s fifth-largest digital coin based on market capitalization.

Binance issued a statement saying that it would not be appropriate to comment on the company’s ongoing conversations with regulators, Bloomberg reported. The company pledged to continue to meet all regulatory requirements.

The SEC declined to comment, according to Bloomberg.

In an interview with Capital.com, Howard Greenberg, president of the American Blockchain and Cryptocurrency Association, predicted that the SEC’s probe will take years. He pointed to the fact that the SEC’s 2020 lawsuit against Ripple, backer of the XRP coin, which involves similar allegations, is only entering the discovery stage.

Regulations needed, says ABCA chief

Howard GreenbergHoward Greenberg, ABCA President (Photo: ABCA)

The SEC has alleged that Ripple conducted a $1.3bn unregistered securities offering. The judge overseeing the case convened a conference call on Tuesday

He made the comments on the same day that two US senators introduced a bill that calls for cryptocurrencies to be regulated as commodities. If it becomes law, the proposed legislation will provide long-sought federal oversight for US cryptocurrencies.

ETH/USD

3,323.66 Price
-4.410% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 6.00

SOL/USD

178.85 Price
+2.120% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 2.2652

XRP/USD

0.63 Price
+3.610% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.01168

BTC/USD

65,714.20 Price
-0.350% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 106.00

“We’re looking at something that was done five years ago,” said Greenberg, referring to the SEC’s investigation of Binance. “This is exactly why we need [federal cryptocurrency] regulations, because for the last five years we haven’t had a clear path that brings ICOs to light.”

News of the SEC investigation came one day after Reuters, citing its own investigation, reported that Binance served as a conduit for the laundering of $2.35bn worth of illicit funds. According to Reuters, some of the laundered money included funds stolen by North Korea’s Lazarus group, which created Binance accounts. And, the Binance exchange was used to process transactions linked to hacks, investment frauds and illegal drug sales.

Binance has acknowledged that the exchange has been involved with stolen funds, but Reuters said the company’s chief communications officer, Patrick Hillmann, called the $2.35bn figure inaccurate.

BUSD to USD

 

Binance facing other probes

According to Bloomberg, Binance is also being investigated by the US government’s Justice Department, Commodity Futures Trading Commission, and Internal Revenue Service.

Meanwhile, two other popular cryptocurrencies – Cardano (ADA) and Dogecoin  (DOGE) – made headlines for different reasons in recent days.

Cardano continued to defy a macroeconomic downturn that has hit the stock and crypto markets, seeing its price rise. In Tuesday afternoon trading in North America, Cardano was up for both the day (1.39%) and week (0.41%) and ranked sixth based on market capitalization.

Markets in this article

BNB/USD
Binance Coin / USD
587.08 USD
-1.57 -0.270%
BNB/USD
Binance Coin / USD
587.08 USD
-1.57 -0.270%
ADA/USD
Cardano / USD
0.41340 USD
0.00031 +0.080%
ADA/USD
Cardano / USD
0.41340 USD
0.00031 +0.080%
DOGE/USD
DogeCoin / USD
0.1295826 USD
-0.0018102 -1.380%

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Related reading

The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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