The German Federal Financial Supervisory Authority (BaFin) is scrutinizing the listing of tokenized Tesla Inc. (NASDAQ:TSLA) shares on the world’s top cryptocurrency exchange Binance.
What Happened: BaFin announced that Binance could have violated security rules when it listed tokenized shares of electric carmaker Tesla, MicroStrategy Inc. (NASDAQ:MSTR), and Coinbase Global Inc. (NASDAQ:COIN) without filing the required prospectus.
The regulator admits that there are exceptions but points out that there are no indications of an exception of the prospectus requirement in this case.
BaFin explains that in Germany, securities can not be offered to the public without the publication of a prospectus and its approval.
During this process, the regulator checks if the firm filed the required information and if it is free of contradictions but does not check if the provided data is true.
See also: eToro vs. Binance
Why It Matters: A violation of the obligation is an administrative offense and can result in a fine of up to €5 million — equivalent to over $6 million or 3% of the company’s total turnover of the last year.
The announcement does not come as a surprise considering that reports about how Binance listing tokenized shares could result in regulatory trouble started circulating over a week ago.
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