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The world of cryptocurrency is facing a seismic reaction as the Securities and Exchange Commission (SEC) charges Binance. BNB dropped 9% in less than 24 hours after the SEC filed the lawsuit against Binance. The allegations are nothing short of explosive. The SEC claims that Binance mixed billions of dollars from its customers. It also alleges Binance surreptitiously funneled funds to a separate entity controlled by Changpeng Zhao, better known as CZ. This bombshell has sent shockwaves through the crypto market, and Binance’s native token, BNB, is feeling the pressure. As investors anxiously ponder the future, the burning question on everyone’s mind is whether BNB will plummet to $200 or if this dip presents a golden buying opportunity.
BNB down almost 9% since the news about SEC suing Binance came out pic.twitter.com/tFThKUY3KK
— legen (@legen_eth) June 5, 2023
SEC Files Lawsuit Against Binance and CZ: Allegations of Violating Federal Securities Laws
The US Securities and Exchange Commission (SEC) has taken legal action against Binance, the popular cryptocurrency exchange, and its CEO, Changpeng Zhao “CZ.” The BNB token and the Binance-linked BUSD stablecoin are among the unregistered securities that Binance, Binance.US, and CZ are accused of making available to the general public in the case. The SEC also alleges that Binance’s staking service violated securities laws. Additionally, the lawsuit claims that Binance allowed the commingling of customer funds and that CZ secretly controlled Binance.US. These serious allegations have sent shockwaves through the crypto community and raised concerns about regulatory compliance.
Today we charged Binance Holdings Ltd. (Binance); U.S.-based affiliate, BAM Trading Services Inc., which, together with Binance, operates https://t.co/swcxioZKVP; and their founder, Changpeng Zhao, with a variety of securities law violations.https://t.co/H1wgGgR5ir pic.twitter.com/IWTb7Et86H
— U.S. Securities and Exchange Commission (@SECGov) June 5, 2023
Charges Against Binance and BAM Trading: Failure to Register as Clearing Agency, Broker, and Exchange
The SEC’s lawsuit targets the largest exchange and includes charges against BAM Trading, the operating company for Binance.US. The allegations against both entities involve multiple failures to comply with registration requirements. Specifically, the charges include failure to register as a clearing agency, failure to register as a broker, and failure to register as an exchange. These regulatory oversights raise questions about the giant exchange’s adherence to proper protocols and may have significant implications for the future of the exchange and its affiliated platforms.
⚡️ SEC vs. Binance. Quick update.
The US Securities and Exchange Commission (SEC) sued the:
🔸 Binance
🔸 Binance US
🔸 BAM Trading (runs Binance US),
🔸 CEO of Binance @cz_binanceThe regulator accused Binance of violating federal securities laws. pic.twitter.com/m2IKM4Xdwg
— Kir ⚡️ (@Kir_Schmunk) June 5, 2023
Binance Accused of Allowing US Citizens to Trade Despite Denials
According to the SEC’s lawsuit, the exchange faced accusations of permitting US individuals to trade on its platform, contrary to its claims that it did not serve US citizens. The suit reveals that the exchange launched the Binance.US platform in 2019, implementing controls to block US customers from the Binance.com platform. However, it is alleged that CZ directed Binance to secretly help high-value US customers circumvent those controls. These actions have raised concerns about Binance’s transparency and regulatory compliance, further amplifying the legal challenges the exchange is facing.
4.
Our team is all standing by, ensuring systems are stable, including withdrawals, and deposits.
We will issue a response once we see the complaint. Haven’t seen it yet. Media gets the info before we do.
🙏
— CZ 🔶 Binance (@cz_binance) June 5, 2023
Tokens Identified as Securities: Cardano, Solana, Polygon, Coti, Algorand, and More
In addition to the charges against Binance, the SEC’s lawsuit also identifies several tokens as securities. Among the tokens mentioned are Cardano (ADA), Solana (SOL), Polygon (MATIC), Coti (COTI), Algorand (ALGO), Filecoin (FIL), Sandbox (AXS), Axie Infinity, Cosmos (ATOM), and Decentraland (MANA). This classification could have wide-ranging implications for the affected projects and may lead to increased scrutiny of their operations. The SEC’s focus on token classification underscores the importance of regulatory compliance within the cryptocurrency industry.
1/ BREAKING: SEC sues Binance
HEADLINE: The SEC complaint identifies 10 tokens it deems to be unregistered crypto asset securities.
The target list includes some of the biggest names in crypto:$SOL, $ADA, $MATIC, $FIL, $ATOM, $SAND, $MANA, $ALGO, $AXS, and $COTI.
more…
— MetaLawMan (@MetaLawMan) June 5, 2023
Allegations of Poor Financial Controls and Diversion of Customer Funds
Furthermore, the SEC’s lawsuit highlights concerns regarding Binance’s financial controls and the diversion of customer funds. The suit alleges that Binance’s inadequate financial practices allowed for the diversion of customer funds, potentially for personal use. Notably, entities controlled by CZ, such as Merit Peak Limited and Sigma Chain, were implicated in receiving significant amounts of customer funds. The alleged lack of oversight and proper safeguards raises questions about the security of user assets and reinforces the need for greater regulatory scrutiny.
7/14
Claims that at times, CZ moved billions of assets of users funds into Merit Peak an entity he controlled in the US and had transferred those assets to third-parties.
Very similar to what SBF had done. pic.twitter.com/iLn7tz6bfg
— Adam Cochran (adamscochran.eth) (@adamscochran) June 5, 2023
Internal Struggles and Allegations of Control by CZ
The SEC lawsuit also sheds light on internal struggles within Binance’s US operations. It alleges that CZ and top Binance officials exerted control despite assurances of independence. Ex-US CEO Brian Brooks expressed concerns about CZ’s dominance. He is also concerned about the influence of entities like Merit Peak and Sigma Chain on Binance’s US platform. These revelations highlight the challenges faced by Binance’s US arm. They also suggest potential conflicts of interest and a lack of transparency within the organization. The lawsuit may bring greater attention to issues surrounding centralized control in the cryptocurrency industry.
1/ The SEC complaint against @Binance appears to solve the mystery of why Brian Brooks abruptly resigned as CEO of @BinanceUS in 2021.
CZ allegedly reneged on promises that Brooks would be given autonomy to run https://t.co/reBq6K7KAs independently from @Binance.
— MetaLawMan (@MetaLawMan) June 5, 2023
The SEC’s lawsuit against Binance and its CEO CZ has sent shockwaves through the cryptocurrency industry and dragged Binance Coin down by over 9% within a few hours of the announcement. The allegations of violating federal securities laws, allowing US persons to trade despite denials, and diverting customer funds have raised significant concerns about Binance’s compliance and transparency.
The outcome of this legal battle will have far-reaching implications for Binance & BNB and the broader crypto market. It underscores the need for stricter regulations and reinforces the importance of investor protection. No matter how the case unfolds, it will have a massive negative influence on BNB price, and market analysts are debating whether it could drag down the prices towards $200.
BNB Price Prediction and Analysis
The daily chart analysis of BNB/USD reveals a significant downward movement today, primarily triggered by the SEC lawsuit filed against Binance and Changpeng Zhao. As a result, the prices have experienced a notable decline, breaching the 50-Day Simple Moving Average. While the current trendline is offering some support to the Binance coin, various indicators indicate the potential for further downward movement.
Should the daily candle break and close below the trendline, it is anticipated to intensify selling pressure, directing the prices toward the initial resistance level of $264. Subsequently, the psychological support at $200 may become the subsequent target. Both the MACD Indicator and the Relative Strength Index (RSI) are displaying strong bearish signals, reinforcing the likelihood of an imminent further decline.
For short-term investors, it is advisable to consider opening a short position in the market if prices fall and close below the initial resistance level of $264.
Also Read:
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