SEC Seeks Binance Chain Scrutiny, Intends to Tap CipherTrace

The US Securities and Exchange Commission (SEC) is considering to initiate an investigation on the transactions made on Binance Chain, the proprietary blockchain of the identically-named cryptocurrency exchange.

In a memo published on Wednesday, the market regulator is planning to offer a one-time contract to California-headquartered blockchain analytics firm CipherTrace scrutinize the blockchain.

Notably, CipherTrace is the only known company to support Binance’s native blockchain and all tokens issued on that.

“The Contracting Officer has determined that CipherTrace Inc., is the only source that can reasonably meet the SEC’s requirement,” the memo read. “CipherTrace products are the only known blockchain forensics and risk intelligence tool that can support the Binance coin (BNB) and all tokens on the Binance network.”

Binance, known for running one of the largest crypto exchanges, rolled out its native blockchain earlier this year, and migrated its exchange token, Binance Coin (BNB) with a market cap of over $2.8 billion to the blockchain and is hosting another 189 tokens.

What is the need for such scrutiny?

Though the regulator did not publish the intention behind the move, it is anticipating to offer the contract initially for a year, with an option to extend it by a year for four consecutive years.

If everything is in line, the contract will be offered by July 31.

“…the government will give consideration to interested parties that identify their interest and capability to respond to the requirement or submit proposals by the response date of the notice,” the memo added.

Notably, Binance is also one of the clients of CipherTrace which was hired by the exchange in April 2019 to enhance its anti-money laundering measures.

Though Binance claims that its blockchain is compliant with the global regulatory standards, its executives were already expecting scrutiny by the regulators.