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The price of BNB has increased 300 times, giving it a market capitalization of over $18 billion. The massive rally has been helped by a huge rise in the price of bitcoin and the price of ethereum since late 2020, although it has recently crashed along with the broader crypto market as strong fears spread of a new “crypto winter”.
Now, after its appearance, BNB is reportedly being investigated by the Securities and Exchange Commission (SEC) over whether Binance broke securities rules by selling BNB, a bitcoin and crypto exchange expert has warned of “potential conflicts of interest and market fairness issues” at Binance.
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“The very subject of the SEC’s investigation, Binance’s BNB, is a prime example of potential conflicts of interest and market fairness issues,” said Zoltan Kormanyos, general counsel for the international website of broker comparison BrokerChooser, in comments via email, adding that the SEC investigation “reinforces the trend,” identified the comparison site in its research on bitcoin and crypto exchanges.
Kormanyos argues that crypto exchanges use fundraising and trading products similar to traditional finance while saying they should be treated differently by regulators. Since the initial coin offering (ICO) boom of 2017, which saw a flood of companies seek to raise funds by issuing cryptocurrencies, the SEC has filed dozens of enforcement actions against ICOs.
Binance and BNB investigation likely months away from conclusion, person familiar with the matter says Bloomberg. News of the survey caused the price of BNB to drop 10%, which has since rebounded slightly.
Binance’s BNB whitepaper, published ahead of its launch, stated that 85% of the funds raised during the ICO would be used to build and promote the Binance platform. Binance traders using BNB to pay fees get a discount on the exchange.
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“As the SEC investigates Binance, all eyes are now on the brand itself which appears to lack transparency between entities as it is unclear how Binance relates to other brands under the same umbrella,” said Kormanyos, pointing to a myriad of legal issues and regulatory challenges faced by Binance over the past year and the relationship between Binance and its US subsidiary BinanceUS.
The price of BNB has crashed along with bitcoin, ethereum and other major cryptocurrencies in recent months, losing more than half of its value since the end of last year.
In late 2020, the SEC sued crypto firm Ripple, alleging it broke securities rules when it sold its XRP
This week, Binance was also accused of being the vehicle for laundering at least $2.35 billion in illicit funds.
Reuters released a report analyzing court records, spoke to law enforcement, and worked with blockchain analytics firms Chainalysis and Crystal Blockchain to track illicit funds on Binance, claiming the exchange has become a “hub for hackers, fraudsters and drug dealers”.
Binance pushed back against the report’s various claims, telling Forbes the report is a “woefully misinformed editorial that uses outdated information from 2019 and unverified personal attestations.”
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Serious Warning Issued Over Major Bitcoin And Crypto Exchange Binance And Ethereum Rival BNB After SEC Bomb Hits Price
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