Bitrabo Editorial
The Crypto market received a huge blow after the Securities and Exchange Commission (SEC) filed a lawsuit against Binance and its CEO Changpeng Zhao. There were also allegations against coinbase Global leading to a sharp decline in Bitcoin prices and crypto stocks like Coinbase Global.
SEC Challenges Binance Over Misappropriation of Customers’ Funds and Illegal Practices
The case, filed in a federal court in Washington D.C., contained 13 counts against Binance, its CEO, and the operator of Binance US. The SEC accused Binance of misusing customers’ funds, directing them to a firm under Zhao’s control called Sigma Chain. Sigma Chain is said to have manipulated the volume of crypto asset securities trading on Binance.US.
The regulator also alleged that Binance and its CEO commingled billions of dollars in customer funds and diverted them to an entity named Merit Peak. The SEC requested a freeze on Binance’s assets and the appointment of a receiver to oversee the situation.
Binance and Coinbase Plunge
The news sent shockwaves throughout the crypto market, triggering a decline in Bitcoin, while Coinbase Global’s stock price collapsed following the SEC’s lawsuit against Binance. However, Binance, which is not a US exchange, trying to mitigate the impact of the lawsuit through a defensive blog post. The regulatory scrutiny is a further hit for Binance that is already under investigation by the DOJ for potential money laundering and sanctions violations.
Meanwhile, Coinbase’s stock (COIN) saw a significant decline reflecting investor concerns on potential spillover effects from regulatory measures. The COIN price plunged from $66 to $51 amid increased regulatory pressure on cryptocurrency firms since the FTX controversy last year.
Regulators Intensify Examination of Crypto Firms
The regulatory environment for crypto firms is considerably tough as regulators continue to scrutinize the industry. The US CFTC charged FTX for illegal operations, and authorities are investigating Binance for alleged money-laundering and sanctions violations. The SEC’s lawsuit against Binance is a continuation of a more complex trend of growing regulatory scrutiny across the crypto sector.
Featured image from Money Morning, Chart from TradingView.com