The US Securities and Exchange Commission’s (SEC) investigation into Binance had stirred fears over regulatory action against other cryptocurrency exchange tokens.
According to reports, the watchdog will look into whether the BNB token was a “Security” at the time of the ICO.
FTX and Other exchanges token price plummets amid Binance investigation
Many crypto exchanges have issued their tokens in the market. Some of them even make the top 50 list of digital assets. The market capitalization of the top Centralized Exchange token has plummeted by 9% in the last 24 hours, according to CoinMarketCap. It is now worth $62.8 billion.
BNB, the fifth-largest token, has lost 10% of its value in the last 24 hours. The prices of major crypto exchanges like FTX, KuCOin, and Huobi tokens have also plunged significantly. Over the last day, the FTT token is down by more than 7%. While KuCOin and Huobi token prices have also dropped by roughly 7% and 3%, respectively.
Cory Klippsten, the CEO of Swan Bitcoin, raised an important question about the SEC’s probe. He asked if this action might put other centrally managed and issued exchange tokens under threat. Klippsten added that these tokens were marketed and sold as profit-making opportunities.
What will happen if BNB turns out to be “Security”?
The SEC’s probe has heightened the difficulties faced by the world’s largest cryptocurrency exchanges. Aside from that, the commission is looking into viable trading abuses by Binance insiders. While its American branch, formed in 2019, Binance.US is also under investigation. However, Binance has clarified that Binance.com and Binance.US are two separate entities.
According to the report, Binance failed to fulfill a promise made in the coin’s offering whitepaper. It promised to reinvest 20% of the exchange’s profit in BNB tokens every quarter. However, CZ stated in a blog post from 2020 that some adjustments were made following legal advice which indicates the possibility of being understood as a “Security. If it is discovered that BNB is a “security,” Binance may find itself in a similar situation to Ripple. The SEC has placed a hold on the XRP token over accusations of being a “security” in nature.
