Crypto market in turmoil as SEC sues Binance
The U.S. Securities and Exchange Commission has filed a lawsuit against Binance, the world’s largest cryptocurrency exchange, and its CEO, Changpeng “CZ” Zhao.
The SEC alleges that Binance has violated securities regulations by partaking in unregistered offers and sales of crypto asset securities and unlawfully soliciting U.S. investors. The commission also classified Binance Coin (BNB) and BUSD, a stablecoin issued by Paxos, as security tokens.
The market reaction to this news has been adverse, with Bitcoin plummeting to its lowest level in months and a drop in the value of BNB and other tokens that have come under the SEC’s scrutiny, such as Solana, Cardano, and Polygon.
Responding to the allegations, Binance reiterated its commitment to engaging with regulators while strongly opposing what it perceives as regulatory overreach.
“Binance remains committed to productive engagement to ensure the next generation of cryptocurrency regulation fosters innovation while implementing and ensuring important consumer protections,” said the company.
“Because Binance is not a US exchange, the SEC’s actions are limited in reach. Still, we stand with digital asset market participants in the US in opposition to the SEC’s latest overreach, and we are prepared to fight it to the full extent of the law.”
The SEC also claimed that some of Binance’s services, including BNB Vault and Simple Earn, violated regulations as these didn’t have proper registration.
Binance responded to the accusation, saying, “Unilaterally labeling certain tokens and services as securities – even ones over which other U.S. authorities have asserted jurisdiction – only compounds these problems.”
If #Bitcoin reaches $25,000,
I will fire up a huge $BTC long position. pic.twitter.com/jemafmgkwG
— Mister Crypto (@misterrcrypto) June 5, 2023
Regulatory crackdown
This year, the SEC has already charged several prominent crypto entities, including Kraken, Genesis, and Gemini Trust, for offering unregistered securities. U.S.-based exchange Coinbase also faced warnings about potential securities charges.
The SEC’s legal action against Binance goes beyond allegations of securities violations. The commission accuses the exchange of operating illegally in the U.S. by providing services to U.S. customers without proper registration and failing to implement adequate know-your-customer measures.
The SEC asserts that Binance was aware of its non-compliance, citing a statement made by the exchange’s chief compliance officer in 2018.
Additionally, the SEC claims that Binance mixed customer funds in an account controlled by Merit Peak Limited, an entity associated with CZ. These funds were subsequently transferred to a third party for crypto asset transactions.
Binance denies these allegations, assuring its users that their assets are secure and willing to defend against any claims suggesting otherwise.
https://twitter.com/Pentosh1/status/1665797329008357378
Crypto prices dip
Following the SEC’s lawsuit, Bitcoin experienced a 5.5 percent decline, reaching its lowest price since March, below $26,000. ETH and BNB also suffered similar declines, losing 5.1 and 9.5 percent of their value, respectively.
However, some analysts believe this development could be beneficial, as it helps weed out bad actors and steers capital away from cryptocurrencies with higher regulatory risks.
Last week, Bitcoin experienced its worst month of trading since November, concluding May with a 7.9 percent decline after staying within the range of $26,000 to $28,000. According to technical analysts, the next support level to monitor for potential downward movement is $25,200.
