$1 billion Of BNB Moved Around The World Yesterday, But Size Isn’t Everything

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Binance’s BNB token has dropped by around 10% on the market charts after the Securities and Exchange Commission sued the world’s largest crypto exchange.

Changpeng Zhao and entities owned by Binance have been accused of deception, conflict of interest, disclosure violation, and many other charges by the Securities and Exchange Commission. They have been accused of illegally operating unregistered national securities exchanges, broker-dealers, and clearing agencies.

Due to this crackdown by the U.S. regulators, Binance has witnessed the biggest drop of this year. Over $1 billion of BNB have been claimed to have moved around in the market due to this action, as per the trade analysts.

Read ahead as we discuss the charges framed by SEC against Binance and its CEO and the impact caused by this crackdown on the crypto exchange.

Impact on Crypto Market

The market capitalization of Binance Coin is more than $43 billion, thereby making it one of the largest cryptocurrencies in the market. At the time of writing, the price of BNB is $274.37. In the last seven days, the value of Binance has dropped by 12% on its price charts.

The news of SEC charges has further accelerated this drop as the crypto has experienced a drop of 8.67% in its value after the news regarding SEC charges broke out in the market. The 30-day moving average of BNB has dropped below its 200-day average, and it is expected that it would continue to fall further in the upcoming days.

The situation for other cryptocurrencies is equally worse as of now. The price of many crypto assets has slumped after SEC accused Binance Holding Limited of illegal operations. The price of Solana has dropped by a huge margin of 13%, while Polygon reduced by 6%, Cardano slumped by 8%, and Filecoin dropped by 10%. The value of Bitcoin was also affected by this crackdown, as it dropped as much as 6.5% to the figure of $25,491. Though the market was on a run of recovery after experiencing a crypto winter last year, however, the regulatory action by SEC has halted the speedy recovery of many crypto assets at this moment.

SEC sues Binance for Illegal Operations

The Securities and Exchange Commission (SEC) has recently charged Binance Holdings Limited, Binance.com, BAM Trading Services Inc, and Changpeng Zhao with a myriad of security law violations. It has been alleged that Binance and Zhao, though, stated that U.S. customers are not allowed to make any transaction on Binance.com, however, they nevertheless allowed some high-value U.S. customers to make transactions on the Binance.com platform secretly.

Even though it was stated that Binance.US was a separate trading platform for investors based out of the U.S., however, the operations of this platform were secretly controlled by Zhao and Binance.

The control exercised by Zhao and Binance over the abovementioned platform allowed them to commingle the assets of their customers with an entity called Sigma Chain, which was owned and controlled by Zhao. Further, investors were also misled by BAM Trading and BAM Management US Holdings, Inc. in relation to the non-existent trading controls exercised over the trading platform, Binance.US.

The trading volume of the platform was also enhanced by artificially manipulating the trading. Billions of dollars of assets owned by the investors were also diverted to a third party, Merit Peak Limited, which is also under the ownership and control of Zhao.

It has been alleged by the Securities and Exchange Commission that Binance and BAM Trading were engaged in the operations of unregistered national securities exchanges, broker-dealers, and clearing agencies. SEC has also accused Binance and BAM Trading of unregistered offer and sale of Binance’s own crypto assets, including a so-called exchange token, BNB, a so-called stablecoin, Binance USD (BUSD), some crypto-lending products, and a staking-as-a-service program. Zhao has been charged with being a controlling individual behind Binance’s and BAM Trading’s operation of unregistered national securities exchanges, broker-dealers, and clearing agencies.

What Lies Ahead?

In an official response, Binance has mentioned that allegations of the SEC on the risks imposed on the user assets on the trading platform of Binance.US are simply wrong. Unfortunately, Binance has been at the heart of legal troubles in the last few months. In March 2023, a complaint was filed against Binance and Zhao for illegally offering crypto futures and other derivates to the residents of the U.S. without any registration. The largest crypto exchange by volume has also been a part of the scrutiny for backroom asset shuffling, where billions of dollars were shifted to hedge funds without giving any intimation to the customers.

Arthur Hayes, the former CEO of BitMEX, is of the opinion, “The market is down on some binance FUD. But regardless of the catalyst, risk mrkts r on edge cause of the TGA refill. By end of summer, the mrkt will move past that and onto the lg amt of money printing humming along in the background. I have a few shitcoins to buy in the meantime.”

Things don’t look very promising for Binance as the exchange has been part of multiple legal proceedings instituted by CFTC and SEC. If Binance manages to successfully put up a strong defence against the fresh allegations by SEC, then only it would be able to bounce back quickly. The fact that BNB’s indicators highlight that it is excessively oversold, which under usual circumstances would show an impending rebound, is the only thing that could be mentioned positively about the cryptocurrency at this moment.

Another interesting thing is that there hasn’t been any significant rise in withdrawals on Binance, thereby suggesting that even if SEC builds a strong case against Binance in court, it may not affect the business of the exchange in the long run. The business may continue to grow with a restricted presence in the U.S., Though SEC action has affected the price of many cryptocurrencies, users may still consider investing in a low-price meme coin, Wall Street Memes, which is a crypto token predicted to rise in the upcoming weeks.

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