Crypto exchange Binance may be facing regulatory scrutiny in Germany having been targeted by a high-profile regulator in the country.
A statement by the Federal Financial Supervisory Authority (BaFin) on Wednesday revealed that the regulator may pursue legal action against the exchange for failure to provide an investor prospectus for a security-tracking tokens launch.
Binance introduced fractionalized tokens to track stock performance for several companies earlier this week, including Apple, MicroStrategy and Microsoft, as well as Coinbase and Tesla.
To this end, Binance has tapped the services of CM-Equity AG, an equity firm that stores the depository portfolio of underlying securities, as per the exchange's statement.
However, BaFin considers the “failure to produce a prospectus” a violation of European Union securities law, which could result in a $6m fine.
BaFin's statement 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.”
Binance spokesperson Jessica Jung has responded to a request for comment to Bloomberg arguing that the crypto exchange took its obligations to comply with existing regulation very seriously. “We will work with regulators to address any questions they may have“, she said.
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