BNB price drops 10% amid SEC probe against Binance

YEREVAN (CoinChapter.com) — BNB dropped by nearly 10% this June 7 after the U.S. Securities and Exchange Commission (SEC) launched a regulatory probe against its parent platform, Binance.

According to a recent report by Bloomberg, the SEC wants to ascertain if Biance broke any regulatory rules during its initial coin offering (ICO) back in July 2017. 

In particular, the regulatory watchdog might look to classify the BNB token as an unregistered security. The exchange had sold all of the 100 million BNB tokens in its ICO. With each token priced at $0.15, Binance raised $15 million in Bitcoin (BTC) and Ethereum (ETH).

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BNB crashing @ the news of SEC currrently investigating Binance's BNB cryptocurrency.#bitcoin #blockchain #web3 #crypto #nfts #defi #ethereum #metaverse #shib #elonmusk #eth #cryptocurrency #luna #bnb pic.twitter.com/5X2b6HHx7i

— CryptoBlockMetaverse (@CryptoBlockMeta) June 7, 2022

In a similar case, the SEC sued Ripple back in December 2020. The law enforcement agency accused Brad Garlinghouse-led startup of selling $1.3 billion of its native XRP token as unregistered securities.

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As CoinChapter earlier reported, the SEC launched another inquiry into Binance.US, the U.S.-based subsidiary of the exchange, in February 2022. The U.S. regulator is reportedly probing the relationship between Binance CEO Changpeng Zhao, Sigma and Chain AG, and Merit Peak Ltd. 

The watchdog intends to determine the extent of the relationship between Binance.US and the two trading firms. Zhao has been allegedly leading both the companies, considered to be marker-makers.

SEC probe impacts the price of BNB

As soon as news broke of the SEC probe, BNB, the native token of the exchange, took a hit. According to data available on CoinMarketCap, the BNB token reached a daily high of $312 on Monday. It had opened the day at $299 per token.

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However, on Tuesday, the world’s fifth-largest crypto by market cap fell to an intra-day low of $277 per token. This marks an over 10% drop in the BNB token price. 

Meanwhile, despite the drop, Binance has refused to comment on the allegations. However, according to Bloomberg, the exchange has vowed to comply with regulatory requirements. 

“It would not be appropriate for us to comment on our ongoing conversation with regulators, which include education, assistance, and voluntary responses to information requests,” 

Binance said. 

Did Binance launder $2.35 billion? 

The Securities and Exchange Commission probe comes as Reuters accuses cryptocurrency exchange Binance of laundering billions of dollars in illicit funds between 2017 and 2021.

“Binance processed transactions totaling at least $2.35 billion stemming from hacks, investment frauds and illegal drug sales, Reuters calculated from an examination of court records,” 

Reuters claimed.

According to the news agency, two blockchain analysis firms calculated the said amount after studying statements by law enforcement and blockchain data.

Reuters reports that Binance facilitated $2.35 billion in illicit transfers from 2017–2021

June 6, 2022https://t.co/tNonLVXEht pic.twitter.com/JcXslCIf8m

— web3 is going just great (@web3isgreat) June 7, 2022

Reuters also claimed two industry experts have reviewed the calculation and agreed with the estimate. However, Binance claimed Reuters was cherry-picking data to feed into the cult of crypto paranoia for fame or financial gain. 

“Like their last article….this latest iteration is rife with falsehoods, massive leaps to conclusions, and relies on poor data that could have been fact-checked by reaching out to one of the major on-chain analyst firms,”

Binance slammed in a detailed blog post.

As the price of the BNB token tanks, the exchange will hope to recover sooner rather than later from the SEC probe.