SEC Drops Lawsuit Bombshell on Binance and CZ

Over $3 billion BNB vanished briefly after the news broke out. The community is in upheaval but CZ stays sturdy.

Binance, the world’s leading crypto exchange, and its CEO, Changpeng Zhao are being sued by the U.S. Securities and Exchange Commission (SEC) over security regulatory violations, as reported by Bloomberg this morning.

Empire Under Fire

In a significant development on Monday, the SEC has filed 13 charges against Binance and its CEO, accusing the exchange of mishandling funds.

In addition, the regulatory body allegedly provided false information to regulators and investors and engaged in manipulative trading practices.

The SEC’s charges include the accusation that Binance mixed substantial amounts of customer funds, amounting to billions of dollars, and secretly funneled them to Merit Peak, a separate company under the control of Binance’s CEO, CZ.

This alleged commingling of funds raises concerns about the security and proper custodial practices employed by the exchange.

The charges assert that Binance misled investors by providing false assurances about the sufficiency of its systems to detect and control manipulative trading activities. The SEC claims that Binance misrepresented its ability to effectively monitor and prevent fraudulent practices, potentially exposing investors to risks associated with market manipulation.

Additionally, the regulator alleges that Binance failed to take adequate measures to restrict access to its unregulated exchange for investors based in the United States.

By neglecting to implement sufficient safeguards, Binance may have allowed U.S. investors to engage in trading activities that do not comply with existing regulations, potentially exacerbating concerns around investor protection and regulatory compliance.

Earlier concerns likewise revolved around the relationship between Binance US and its parent company. According to the Wall Street Journal, Binance US may serve as a shield against direct surveillance from the U.S.

Documents obtained by the WSJ suggested a significant interdependence between Binance and Binance US. The personnel of both companies are reportedly closely intertwined, with a noticeable overlap in their roles and responsibilities.

Moreover, financial reports and cryptocurrencies are being exchanged back and forth between the two entities.

CZ quickly provided a response to the SEC’s allegations. In the latest tweet, Binance’s CEO started with “4,” referring to “FUD.”

In March, the crypto giant was also sued by the SEC’s associate – the Commodity Futures Trading Commission (CFTC) over illegal operations. Around that time, observers conceived the lawsuit as the regulators’ first step in targeting the exchange and tightening cryptocurrency trading activities.

Market Moves to Bear Wash Out

The news instantly triggered massive outflow from the exchange. On-chain data indicates that over $3 billion BNB vanished within minutes after the news surfaced. Binance Coin (BNB) has since dropped from over $300 to $280.

Not only Binance Coin, but the news has also sent a shockwave to other cryptocurrencies. In one hour, Bitcoin’s price plummeted to $25,800; other top coins dropped by 3% to 4%, per CoinMarketCap.

The charges brought forth by the SEC represent a significant escalation in the regulatory scrutiny faced by Binance and its CEO.

As this legal battle unfolds, the cryptocurrency industry will be closely watching the outcome, as it could have far-reaching implications for the wider market and investor confidence in the sector.

June could be an uneasy month for the overall market.

The market experiences a shift towards a bearish sentiment as investors brace for the upcoming Federal Open Market Committee (FOMC) meeting scheduled for June 13-14. Concerns over inflation and the potential for interest rate adjustments mount after the latest economic data reveals a rise in the unemployment rate.

With Binance sitting as the largest crypto company on the planet, it was only a matter of time before the SEC came for its pound of flesh.

Read More

What do you think?

Written by admin

Leave a Reply

Your email address will not be published. Required fields are marked *

GIPHY App Key not set. Please check settings

Top 3 Ignorant Ways Crypto Users Can Give Scammers Access To Their Wallets

Top 3 Ignorant Ways Crypto Users Can Give Scammers Access To Their Wallets

Bitcoin Price Prediction: Support Found at $26,200 -back?

Bitcoin Price Prediction: Support Found at $26,200 -back?