The U.S. Securities and Exchange Commission is investigating whether Binance Holdings broke any securities rules when it sold digital tokens in 2017 just as the cryptocurrency exchange was getting started, Bloomberg News reported, citing people familiar with the matter. At issue is whether Binance's initial coin offering of Binance coin (BNB-USD) amounted to the sale of a security that should have been registered with the SEC, they said. The token has become the world's fifth biggest cryptocurrency, according to CoinMarketCap. The SEC uses the "Howey test" to determine if an asset has the characteristics of a security. Under that test, an "investment contract", or security, exists when there's an investment of money in a common enterprise with a reasonable expectation of profits to be derived from the efforts of others, the SEC says. The scrutiny adds to pressures on the world's largest cryptocurrency exchange. Bloomberg had previously reported that the
