Binance Coin Slips into the Red After Lawsuit by US Financial Regulator CFTC
Binance is in trouble in the U.S. because the local regulator CFTC filed a lawsuit. 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 SEC, are currently taking.
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.
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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)
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