German Government Warns that Binance Might Violate Local Laws

The Federal Financial Supervisory Authority (BaFin), Germany’s financial watchdog has warned that Binance could be fined up to €5 million for offering security/tracking tokens without compliance with local regulations.

The cryptocurrency exchange, one of the biggest in the industry, recently announced that it would be adding tokens tracking Microstrategy, Microsoft, and Apple stock, in addition to the already existing Coinbase, and Tesla-tracking tokens, with all of them being denominated in Binance USD (BUSD).

Later on Wednesday, BaFin announced that the tokens for Tesla, Microstrategy, and Coinbase had been deemed to be “suspicious” as no prospectus was issued, a violation of European Union securities laws.

The statement by BaFin said:

“BaFin has grounds to suspect that Binance Germany is selling shares in Germany in the form of ‘share tokens’ without offering the necessary prospectuses. Please bear in mind that securities investments should only ever be carried out on the basis of the necessary information.”

As a result of this violation, Binance could be fined €5 Million (about $6 million) or 3% of the company’s turnover in 2020.

Binance Might be Breaking Laws in Other Countries

The German regulatory agency is not the only entity to raise concerns about the legal compliance of Binance’s new tokens, as the Securities and Futures Commission (SFC) of Hong Kong might consider the exchange’s marketing campaign to be a violation of local securities regulations.

According to reports, Binance doesn’t seem to have a license to trade or even market security tokens in the country, which would put it in a place of legal liability.

As Binance is marketing the tokens as Security Tokens, that would make the activity fall under the prevision of securities laws as such tokens are “likely to be securities, according to the SFC.

The United Kingdom’s Financial Conduct Authority has been reported as working with the exchange to understand how the new product…

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