The world's leading cryptocurrency platform, Binance, could receive fines from Germany and other European countries for allegedly violating European laws regarding the listing of equity tokens and investments by companies.
The German Federal Financial Supervisory Authority - BaFin (Bundesanstalt fuer Finanzdienstleistungsaufsicht), has warned Binance that it could receive a fine of up to $ 6 million if no steps are taken to address the breach.
Binance earlier last week announced its plans to launch additional equity tokens of three Fortune 500 companies and thus bring the tally to five on its platform. However, she was accused of failing to follow due process, for failing to publish a prospectus for the Investors, before the announcement of new listings.
Prospectus for investors and the EU
An investor prospectus is a legally certified document provided by a company seeking to raise capital or by the party acting on its behalf with the public. Here's what information it consists of:
- Details of the company's main business line.
- The current state of the issuing company's finances and policies relating to how the shares are held.
- The total volume and unit value of the securities offered for purchase and trading.
In the EU, an investor prospectus approved in one country becomes binding on all other member countries and any attempt to raise capital, digitally or non-digitally, must meet all legal requirements in accordance with its resolution of the action plan for the 2017/1129 Capital Markets Union, including the submission by the issuing company of an adequately documented prospectus for investors.
Stock tokens which are the digital equivalent of a company's traded shares in the stock market have become the newest way to raise capital through the public, with many companies now issuing them as a complement to their traditional quotes.
Staying on top seems harder for Binance
Binance has come a long way to its current location, and the billions of transactions happening every day and processing comfortably are a testament to the platform's preference by many around the world. But as it turns out, staying on top is much more difficult than climbing to the top. Perhaps, it is this drive for consistent relevance that fuels Binance's enthusiasm to consolidate and extend its top market position in other cryptocurrency sectors by diversifying, first with equity tokens and more recently with NFTs.
Earlier this year, when Binance announced its plans to deepen the equity token business, many investors warned of the possibility of facing many legal problems. Especially in countries that have yet to take a definitive regulatory stance on cryptocurrencies or define what type of assets they are. These warnings appear to have come sooner than expected.