US officials are investigating Binance for its 2017 initial coin offering (ICO), putting more pressure on the troubled exchange, which is already under investigation for allegedly facilitating billions of dollars in illicit funds in recent years.
The Securities and Exchange Commission (SEC) is investigating charges that the world's largest crypto exchange by trading volume failed to register its token as a security with the regulator. The agency is investigating if a suspected violation of US securities laws happened.
Bloomberg announced the news on June 6, citing sources close to the probe who asked to remain unnamed because the ICO investigation is a private matter.
The SEC is also apparently investigating market-making companies linked to Binance CEO Changpeng "CZ" Zhao, who owns market makers on Binance.
Bloomberg stated that the United States had sparked the regulator's interest. Binance and the United States are distinct entities.
"We have been working extremely hard to educate and help law enforcement and regulators in the United States and around the world," a Binance spokesman told Blockworks, without directly commenting on the investigation. "We will continue to meet all regulatory standards."
In the past, public ICOs were a popular crowdfunding mechanism for raising capital for new crypto projects and ecosystems. They have since fallen out of popularity as a result of legal uncertainty.
Binance raised $15 million in 16 days from its ICO listing five years ago, when it offered BNB to the public for $0.15 each as an ERC-20 token on the Ethereum blockchain. According to Messari statistics, BNB was last observed changing hands for roughly $283, a 19.86 percent decrease year to date.
Bloomberg's claim comes on the heels of a separate Reuters story on Monday stating that between 2017 and 2020, Binance processed $2.35 billion in illicit transactions resulting from cyberattacks, fraud, and the unlawful selling of drugs.
It is the latest in a series of allegations leveled against the exchange, which was in regulatory hot water last year for allegedly failing to properly register its business in jurisdictions such as the United Kingdom, Italy, and Singapore. Binance does not have a formal headquarters and is not registered in any country.