The industry poorly received the news of an ongoing SEC investigation into leading cryptocurrency exchange Binance.

According to Bloomberg, cryptocurrency exchange Binance may have violated securities regulations when it launched its BNB token in an initial cryptocurrency offering (ICO) five years ago. Commission investigators need to determine whether the initial offering of the currency at the time amounted to a sale of a security, meaning that Binance should have registered it with the SEC.

The SEC has filed dozens of lawsuits over ICOs involving virtual currency issuance to raise capital. BNB was part of Binance’s vast crypto empire. Cryptocurrency can come under SEC scrutiny if investors buy it to fund a company or any project to make a profit, based on a 1946 U.S. Supreme Court decision defining investment contracts.

In addition, Reuters published a special report that between 2017 and 2021, Binance had at least $2.35 billion in transactions related to hacking, investment fraud, and drug sales.

As of Tuesday, bitcoin was back at $29,000, previously down 5%; Ethereum is quoted at $1700 with a 6% decline, BNB and Solana are down 8%, and Cardano is down 7%, and Avalanche is down 11%.

At this point, both Binance and the regulator, the SEC, declined to comment.

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