- Binance is allegedly being investigated by the SEC over its 2017 ICO
- Bloomberg reports that the exchange sold tokens to U.S. citizens
- The news came the same day as an explosive Reuters report on money laundering through Binance
Binance received a double blow on Monday as Bloomberg claimed that the Securities and Exchange Commission (SEC) is investigating the exchange’s 2017 ICO for potential sale of securities to U.S. citizens on the same day that Reuters published an investigation alleging it allowed billions of dollars to be laundered by criminals. Bloomberg cites “people familiar with the matter” as confirming the SEC’s investigation, which could result in a hefty fine if Binance is found guilty.
2017 ICO Was Sold to U.S. Citizens
The SEC charge centres around the allegation that Binance sold its BNB token to U.S. citizens in contravention of securities laws. Binance held its ICO in July 2017 and launched shortly afterwards, with the suggestion being that it allowed U.S. citizens to take part, in contravention of American securities laws.
Binance released a statement to Bloomberg in which it said that “it would not be appropriate for us to comment on our ongoing conversations with regulators, which include education, assistance, and voluntary responses to information requests.” The company added that it works with authorities and “we will continue to meet all requirements set by regulators.”
Reuters – Binance Allowed Laundering of $2.35 Billion
On the same day as this news broke, Reuters published an investigative report in which it said that prior to its KYC/AML requirements, which came into force last year, Binance became a “hub for hackers, fraudsters and drug traffickers”, allowing them to funnel at least $2.35 billion in illicit funds through its exchange.
Reuters looked at a number of cases where Binance allowed hackers and other crypto criminals to set up accounts specifically to launder funds, with just an email address required to get started. These included $5.4 million stolen from Slovakia exchange Eterbase, which Reuters said was laundered through Binance by North Korean hacking group Lazarus.
Reuters also found that $780 million worth of funds was laundered through Binance from dark web marketplace Hydra between 2017 and 2022, which was shut down in April.
Zhao Criticises “Frivolous External Attacks”
CEO Changpeng Zhao did not speak to Reuters about their findings, with Chief Communications Officer Patrick Hillmann declining to accept Reuters’ calculations, although he did not respond to requests to provide Binance’s own figures for the cases identified. However, Zhao did allude to the twin attacks on Twitter:
There is a positive side to everything.
Was asked yesterday, how did you build such a tight team? Me: try fight in the trenches together.
Sometimes, even frivolous external attacks help. And we have had plenty of “help” over the short few years.
— CZ 🔶 Binance (@cz_binance) June 7, 2022
While the SEC case will only result in a fine (if it gets that far), any legal action amounting from the Reuters report could be more serious for the company and for Zhao.
