On Monday, the United States Securities and Exchange Commission (SEC) dealt a significant blow to the crypto market by filing a lawsuit against Binance, one of the world’s largest crypto exchanges, and its CEO, Changpeng Zhao. 

The lawsuit alleges the misuse of customers’ funds and the operation of an illegal trading platform within the United States. Consequently, the news triggered a sharp decline in Bitcoin prices and crypto stocks like Coinbase Global.  

In a complaint filed in a federal court in Washington, D.C., the SEC listed 13 charges against Binance, Zhao, Binance’s CEO,  and the operator of its independent US exchange. The regulatory body accused Binance and Zhao of misusing customers’ funds, diverting them to a trading entity called Sigma Chain, which was under Zhao’s control. 

Additionally, the SEC claimed that Sigma Chain engaged in manipulative trading practices, artificially inflating the trading volume of crypto asset securities on the Binance.US platform.

The regulator further asserted that Binance and its CEO commingled billions of dollars in customer assets and diverted them to a third-party entity named Merit Peak, also owned by Zhao. To address these concerns, the SEC requested a freeze on Binance’s assets and the appointment of a receiver to oversee the situation.

“We allege that Zhao and Binance entities engaged in an extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law,” said SEC Chair Gary Gensler. 

Binance responded to the SEC’s actions through a blog post, pledging to vigorously defend its platform. The company argued that the lawsuit’s impact would be limited since Binance is not a US-based exchange.

The impact of the SEC’s lawsuit against Binance and its CEO Changpeng Zhao reverberated throughout the cryptocurrency market, triggering a widespread decline. Bitcoin, the flagship cryptocurrency, experienced a notable decline in response to the regulatory developments.

Coinbase Global a prominent player in the crypto industry, was not immune to the shockwaves generated by the SEC’s lawsuit against Binance. Alongside Binance, Coinbase has also been sued by the SEC, leading to a plunge in its stock price.

The company’s stock (COIN) registered a substantial decline following the news, reflecting investor concerns about potential spillover effects from regulatory actions. COIN’s price fell from its Monday price of $66 to $51 at the time of this writing.

The downturn in Coinbase’s stock price is indicative of the overall sentiment within the market, as investors grapple with the potential implications of the SEC’s legal action against Binance and Coinbase. Uncertainty surrounding the regulatory landscape and the broader impact on the crypto industry has cast a shadow on the short-term outlook for Coinbase and other crypto-related stocks. 

The ripple effect was not limited to individual stocks but extended to the overall market sentiment surrounding cryptocurrencies. Bitcoin, the bellwether digital currency, witnessed a downward trajectory as market participants reacted to the news. 

The SEC’s lawsuit against Binance reflects a broader trend of increased regulatory scrutiny faced by the crypto industry. Regulators have intensified their examination of crypto firms since the FTX controversy and other similar incidents that occurred last year. 

The US Commodity Futures Trading Commission (CFTC) has already filed charges against FTX for allegedly operating an illegal exchange and maintaining a “sham” compliance program. 

Binance itself is also under investigation by the Department of Justice (DOJ) for potential money laundering and sanctions violations.

Similar to Notcoin - TapSwap on Solana Airdrops In 2024

origin »

184 +