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Binance’s own popular cryptocurrency tanks on rumors of SEC investigation

June 7, 2022, 4:10 PM UTC

The halcyon days of crypto’s Wild West free-for-all may be drawing to a close. 

Just a week after the U.S. Securities and Exchange Commission opened its first case into insider trading of digital assets, it may now be investigating the world’s largest cryptocurrency trading exchange. 

According to a report in Bloomberg published late on Monday that cited informed sources, the SEC is examing whether Binance’s 2017 issue of its native BNB coin amounted to the sale of a security that required registration with the agency.

Few big game fish in the crypto sea are a more tempting prize for regulators than Binance, a company founded by billionaire Changpeng “CZ” Zhao and registered in the Cayman Islands

His exchange has repeatedly come under scrutiny across the world as the authorities seek to close any legal loopholes around money laundering. 

On Monday, Reuters investigation claimed Binance served as a conduit for concealing the illicit origin of at least $2.35 billion in funds over its five-year existence. 

Coinholders promptly began unloading their BNB on Tuesday, sending the world’s fifth most valuable token tanking during the trading session. It fell 7.3% to $281, recovering somewhat after dropping as far as $275.21 at one point, according to data from CoinGecko

OpenSea scandal

Currently valued at $45 billion in aggregate, it ranks only behind Bitcoin and Ether, as well as the stablecoins Tether’s USDT and Circle’s USDC, in terms of total market cap. 

The token is extremely popular since Binance users receive a small discount when settling their transaction fees on the exchange in BNB.

Neither Binance nor the SEC responded to a request by Fortune for a statement. 

Bloomberg’s report of the rumored SEC investigation is the latest bad news to hit the crypto industry, reeling from scandals and a general loss of appetite in risk assets as the Federal Reserve tightens monetary policy.

Last months saw the unprecedented collapse of the algorithmic stablecoin TerraUSD and its sister governance token Luna, which wiped out tens of billions of dollars invested in the two cryptocurrencies, shaking confidence in the market.

More recently, the SEC turned its sites to OpenSea, the leading platform for buying and selling in digital collectibles known as NFTs, and pressed charges against a 31-year-old manager for insider trading.

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