Binances BNB Token Drops Nearly 10% in Biggest Drop This Year After SEC Sues Crypto Giant

[ad_1]

Topline

A cryptocurrency created by Binance tumbled nearly 10% after the Securities and Exchange Commission sued the world’s largest crypto exchange on Monday for allegedly conducting an illegal operation in the United States, marking its biggest drop ever. one day so far this year as U.S. regulators continue to crack down. on crypto companies.

Monday, following a lawsuit filed by the SEC.NurPhoto via Getty Images Highlights

Binance Coin (BNB) fell 9.82% as of 5 p.m. Monday to a two-month low of $275.29, after falling nearly 5% in the first hour since the SEC announced its decision. lawsuit, the second civil suit aimed at the crypto exchange in recent months, following an earlier lawsuit by the federal Commodity Futures Trading Commission.

The value of BNB has now fallen almost 12% over the past week and more than 18% since April, according to data from CoinGecko.

Binance isn’t the only cryptocurrency that tumbled on Monday: Bitcoin fell more than 5.5% to a two-month low of $25,620, while Ethereum fell nearly 5% to 1 $803 and Dogecoin was down over 8% to just under 7 cents.

Peg News

The SEC alleges that Binance and its founder Changpeng Zhao misused customer funds, in some cases diverting them to a Zhao-owned entity called Sigma Chain that conducted manipulative transactions to inflate trading volume on the crypto exchange. The complaint also states that while Binance and Zhao claimed that the company’s US subsidiary was an independent trading site, in reality they controlled it behind the scenes and the company allegedly allowed certain US customers to use the main Binance exchange. Zhao denied the allegations, calling the lawsuit unwarranted and one of many misguided actions by the SEC targeting crypto.

Tangent

Shares of leading crypto broker Coinbase have also fallen so far on Monday, falling more than 10.5% to $57.69, though they are still up more than 71% on the year.

Key Context

Binance has faced a slew of legal issues in recent months as crypto markets remain fragile after plummeting last fall amid concerns of a prolonged bear market called a crypto winter. In March, the CFTC filed a lawsuit in federal court in Chicago alleging that Binance and Zhao were offering crypto futures and other derivatives contracts to US residents without registering those offerings through the CFTC. The lawsuit also alleges that former corporate compliance officer Samuel Lim aided and abetted violations of US law by Binance. Binance was also scrutinized for a behind-the-scenes asset shake-up between August and December 2022 involving around $1.8 billion that it transferred to hedge funds without informing its customers, who were told the tokens were 100% guaranteed, Forbes reported in February. The change marked a series of internal moves eerily similar to those of bankrupt crypto firm FTX. Binance had also pulled out of a non-binding deal in November to buy FTX’s non-US operations after the companies collapsed, citing the company’s liquidity issues beyond our control or ability to help after that. FTX users have withdrawn billions of dollars of its cryptocurrency from the platform.

Contra

Binance is not the only crypto firm to face allegations from US authorities. In December, disgraced former FTX CEO Sam Bankman-Fried was indicted on eight counts, including wire fraud on customers and lenders, money laundering and violation of U.S. data protection laws. campaign finance, after he was arrested in the Bahamas in the weeks following FTX’s sudden collapse. Bankman-Fried, who has denied the allegations and pleaded not guilty to the charges, allegedly defrauded clients by redirecting their deposits to pay expenses for crypto trading firm Alameda Research, which he co-founded. The SEC also plans to take legal action against Coinbase over allegations that it violated investor protection laws, according to an SEC warning to Coinbase, The Wall Street Journal reported.

Further reading

SEC sues Binance for multiple US rule violations (Forbes)

US regulator says Binance illegally helped Americans trade on its exchange (Forbes)

Send me a secure tip.

I’m a Boston-based journalist. Prior to joining Forbes, I covered the environment, local government and the arts for a small town Nantucket newspaper. My previous works include NPR, WBUR, WCAI and Nantucket Today. I graduated from the University of Massachusetts, Amherst with a degree in political science. Email me at [email protected]

Read moreRead less

[ad_2]