Binance Coin Slips into the Red After Lawsuit by US Financial Regulator CFTC

Binance and CEO Changpeng Zhao (CZ) are to stand trial in the US. The US financial regulator CFTC (Commodity Futures Trading Commission) has sued CZ, an assistant, and several subsidiaries of Binance. The statement of claim accuses them of allowing US citizens to trade futures, options, and other derivatives based on cryptocurrencies from 2019.

In addition, there are allegations of deliberately lax handling of identity checks (Know Your Customer (KYC)) and insider trading. The CFTC’s action temporarily led to a price slide of almost ten percent for Binance Coin (BNB). In the meantime, however, BNB is showing a cautious upward trend again.

Read more about Binance and find other important financial news from around the world, with our companion app Born2Invest.

There had been rumors about possible legal problems for Binance in the USA for quite some time

Founder CZ now rejected the accusations in an open letter and recalled that his company has been cooperating closely with the CFTC for more than two years. The complaint is based on an incomplete list of facts and also misclassifies them in many cases, Zhao wrote. Binance itself posted a letter online, which was already addressed to three U.S. senators before the lawsuit was filed, explaining in detail the crypto exchange’s U.S. operations.

In fact, Binance established a U.S. subsidiary in the summer of 2019 to accommodate regulatory requirements and customer requests. But the CFTC wants to prove that Binance.us remained impermissibly close to international business. It says Binance.us did not have CFTC approval to offer derivatives trading. Also, Binance had not decisively enforced, especially with large customers based in the U.S., that they could no longer access Binance’s global offering.

Conclusion: Binance under pressure in the US – will an out-of-court settlement come?

The relatively weak influences of the US lawsuit on the price curve of Binance Coin testifies to a wait-and-see attitude of the markets. Apparently, the prevailing belief is that Binance and CZ can extricate themselves from the awkward position and do not have to abandon the US business. An out-of-court settlement between CFTC and Binance could include penalties and changes in the offering.

So far, it is assumed to be rather unlikely that CZ and Binance will prefer to go to court, where unpleasant internals may become public and a verdict may drag on. In any case, however, the intervention of the CFTC once again proves the crypto-critical course that U.S. authorities, led by the U.S. Securities and Exchange Commission (SEC), are currently taking. Lawsuits against Ripple (XRP), Justin Sun of Tron (TRX), and against Ethereum (ETH) are just three current examples that are being discussed beyond the US.

__

(Featured image by satheeshsankaran via Pixabay)

DISCLAIMER: This article was written by a third party contributor and does not reflect the opinion of Born2Invest, its management, staff or its associates. Please review our disclaimer for more information.

This article may include forward-looking statements. These forward-looking statements generally are identified by the words “believe,” “project,” “estimate,” “become,” “plan,” “will,” and similar expressions. These forward-looking statements involve known and unknown risks as well as uncertainties, including those discussed in the following cautionary statements and elsewhere in this article and on this site. Although the Company may believe that its expectations are based on reasonable assumptions, the actual results that the Company may achieve may differ materially from any forward-looking statements, which reflect the opinions of the management of the Company only as of the date hereof. Additionally, please make sure to read these important disclosures.

First published in BLOCK-BUILDERS.DE, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

Although we made reasonable efforts to provide accurate translations, some parts may be incorrect. Born2Invest assumes no responsibility for errors, omissions or ambiguities in the translations provided on this website. Any person or entity relying on translated content does so at their own risk. Born2Invest is not responsible for losses caused by such reliance on the accuracy or reliability of translated information. If you wish to report an error or inaccuracy in the translation, we encourage you to contact us