Germany's financial regulator (BaFin) is investigating Binance's violations in the launch of its tokenized stock service

As previously reported, European regulators will check the legality of Binance's tokenized stock offerings - the first regulator woke up, namely the German Federal Financial Supervisory Authority (BaFin) began checking Binance's violations in launching the tokenized stock service.

The Federal Financial Supervisory Authority (BaFin) has issued a formal warning to investors that Binance may have violated securities laws when it launched tokenized stock trading.

Binance reported that the tokenized shares are handled by regulated investment group CM-Equity and comply with the provisions of the second edition of the EU Markets in Financial Instruments Directive (MIFID II). The BaFin document said the instruments are sold by Binance Germany GmbH & Co. According to the regulator, the firm offers "securities in the form of TSLA/BUSD, COIN/BUSD and MSTR/BUSD tokens without the necessary prospectuses on the website." BaFin emphasized that CM-Equity is not mentioned in the marketing material.

"A public offering of securities without an approved prospectus is a violation of the EU Prospectus Regulation," - the regulator said.

"BaFin has reasonable grounds to suspect that "token shares" in the TSLA / BUSD, COIN / BUSD and MSTR / BUSD markets are being offered without the required prospectus. We have no evidence to suggest they are exempt from the prospectus requirements," - the publication says.

BaFin did not specify what decision it would take against Binance, but cited potential fines in such cases. - €5 million or 3% of revenue for the last fiscal year. Also, the law allows for additional penalties of double the amount of profits received.

04.05.21

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