“Because of our size and global name recognition, Binance has found itself an easy target caught in the middle of a US regulatory tug-of-war.”īitcoin, the world’s most popular crypto asset and a bellwether for the broader digital asset industry, fell 6% Monday to $25,615. “We respectfully disagree with the SEC’s allegations that Binance operated as an unregistered securities exchange or illegally offered and sold securities,” the company said in a statement. Ī spokesperson for Binance said the company takes the SEC’s allegations seriously, but it believes the agency’s accusations are “unjustified.” “Binance’s CCO bluntly admitted to another Binance compliance officer in December 2018, ‘we are operating as a fking unlicensed securities exchange in the USA bro,’ ” the complaint reads, referring to the company’s chief compliance officer. The complaint further alleges that Zhao and Binance knew they were violating US laws. The SEC also alleges that Zhao and Binance commingled customer assets and even diverted some to an entity controlled by Zhao. “Through 13 charges, 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 in a statement Monday. It also named Binance’s CEO Changpeng Zhao, known as CZ, as a defendant. The Securities and Exchange Commission, Wall Street’s primary regulator, alleges the company acted in “blatant disregard” of US securities laws. The stormy journey ahead remains fraught with challenges and uncertainties for the once-promising American arm of the global exchange giant.Federal regulators have sued Binance, the world’s largest crypto exchange, accusing the company of running an illegal exchange in the United States and commingling billions of dollars’ worth of customer funds. However, its American counterpart faces an uncertain future.Īs the Justice Department investigation gains momentum, Binance.US braces itself for a potentially expensive and lengthy litigation process. On a global scale, Binance still commands a substantial portion of the market, retaining 52% of the share, albeit down from 60% earlier in the year. Related: Coinbase CLO Blasts SEC’s “Hide the Ball” Strategy in Binance Lawsuit In addition, under the pressure of federal investigations, several high-ranking officials at Binance have tendered their resignations, adding to the turmoil. Market data from provider Kaiko shows a drastic plunge in the exchange’s market share, dropping to just a little over 1%. The aftermath of the SEC’s lawsuit has been nothing short of catastrophic for Binance.US. arm due to its late 2019 launch but found that the parent Binance exchange engaged in wash trading for about 46% of its total volume. Meanwhile, the professors conducting the study didn’t analyze Binance’s U.S. Such revelations imply that this dubious practice is an industrywide issue with significant ramifications.įor context, the study estimated that wash trading would have created a fake volume of more than $6 trillion in the first quarter of 2020 alone. The study suggests that over 70% of trading volume on various crypto exchanges could be attributed to wash trading. Is This Now an Industry-Wide Issue?Ī recent study, set to be published in the esteemed journal Management Science, indicates that wash trading may be far more prevalent than previously suspected. “We strongly believe that the SEC’s allegations regarding wash trading are entirely unfounded, and based on a fundamental misunderstanding of the facts and a misapplication of the relevant law,” a spokeswoman for Binance.US said. A spokesperson for Binance.US emphasized the company’s belief that the SEC’s allegations regarding wash trading lack any factual basis. The SEC further claims that the day after the exchange’s launch, nearly 70% of trading volume for a specific token was a result of wash trading between Sigma Chain accounts and accounts belonging to Zhao and other senior employees.īinance.US vehemently refutes these accusations, firmly stating that the claims are based on a misinterpretation of facts and an erroneous application of the law. Read More: Federal Reserve Steps in to Address SEC Lawsuit Against Binance and CEO CZ Binance.US Caught in the Eye of the StormĪccording to the SEC, Binance.US, ever since its inception in 2019, has been boosting its trading volumes through a Swiss trading company known as Sigma Chain, which is under the control of Binance’s Chief Executive, Changpeng Zhao. Wash trading is where some bitcoin billionaire has 2 wallets, they "trade" to them self, to show market volume that really didn't happen, falsely inflating the market.- Friday Jams.mp4 June 5, 2023
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