Germany’s Financial Supervisory Authority BaFin has warned investors the cryptocurrency exchange Binance may have violated European securities rules with the launch of its stock tokens.

• In an announcement Wednesday, BaFin said the Binance stock tokens tracking the movement of shares in Tesla, Coinbase and MicroStrategy have been identified as “suspicious” and require a prospectus that wasn't issued prior to trading.
• BaFin said the cryptocurrency exchange has violated the prospectus obligation under Article 3 Paragraph 1 of the European Prospectus Regulation.
• According to BaFin, the violation of the prospectus constitutes an administrative offense and can be punished with a fine of up to €5 million ($6 million) or 3% of Binance’s annual revenue.
• Elsewhere red flags have already been raised by Hong Kong law firms regarding the Binance stock tokens launched earlier this month.
• On April 22, the Financial Times reported that U.K.'s regulator, the Financial Conduct Authority, is “working with the firm [Binance] to understand the product, the regulations that may apply to it and how it is marketed.”
• The stock tokens allow Binance customers to purchase as little as one-hundredth of a regular share using Binance USD (BUSD), a U.S. dollar stablecoin issued by the exchange.
• Binance was contacted for comment, but didn't immediately respond at the time of publication.

Read more: Binance’s Tesla, Coinbase Stock Tokens Under Scrutiny From UK Regulator: Report