Binance’s attempts to link traditional markets to the cryptocurrency field in the form of segmented exchange codes have caught the attention of the German financial regulator.
The Federal Financial Conduct Authority, known as BaFin, warned on Wednesday that the world’s largest cryptocurrency exchange could face heavy fines for issuing security codes without a proper investor prospectus.
Binance launched hashed exchange tokens for Apple, MicroStrategy and Microsoft on Monday, adding Coinbase and Tesla tokens, which launched earlier this month. The exchange used the German public company CM-Equity AG to create a “custodian portfolio for underlying securities,” which Binance claims provides full financial support for the tokens.
The regulator said that Binance’s failure to provide an investor prospectus for any of the issued tokens is in violation of EU securities law and could result in a € 5 million ($ 6 million) fine.
BaFin stated, “BaFin has reason to suspect that Binance Germany is selling shares in Germany in the form of ‘stock symbols’ without providing the required flyers,” BaFin said.
The regulator added: “Please note that investments in securities should be made only on the basis of the necessary information.”
Binance told Cointelegraph, “Binance takes its commitments very seriously and strives to comply with local regulations wherever we operate. We will work with regulators to answer any questions they may have. ”
Company spokeswoman Jessica Young previously told Bloomberg that the stock exchange intends to comply with various legal regulations and will take steps to remedy the situation.