{"id":382644,"date":"2023-03-30T18:39:05","date_gmt":"2023-03-30T18:39:05","guid":{"rendered":"https:\/\/insidebitcoins.com\/?p=382644"},"modified":"2023-04-18T19:28:12","modified_gmt":"2023-04-18T19:28:12","slug":"what-will-be-the-consequences-of-the-lawsuit-against-binance","status":"publish","type":"post","link":"https:\/\/insidebitcoins.com\/news\/what-will-be-the-consequences-of-the-lawsuit-against-binance","title":{"rendered":"What will be the consequences of the lawsuit against Binance?"},"content":{"rendered":"

As we have reported recently<\/a>, the Commodity Futures Trading Commission, or CFTC, of the US has filed a lawsuit against Binance, the largest cryptocurrency exchange in the world, leaving it in a very unclear situation. It’s the most recent illustration of the greater federal scrutiny the sector has been subject to as a result of a spate of scandals in recent years. These recent actions of the US government against the crypto sector have been nicknamed “Operation Choke Point 2.0<\/a>“, to decry what appears to be a systematic effort at attacking the industry.<\/p>\n

In the case, which was brought on Monday, Binance is accused of deliberately evading US rules, including neglecting to register there and allowing Americans to trade cryptocurrency derivatives, which are not permitted for regular investors.<\/p>\n

The CFTC complaint also alleges that through 300 “house accounts” directly or indirectly held by CZ and connected companies, the exchange was giving special treatment not only to VIP clients but also to itself. Binance declined to respond when the CFTC asked it how its accounts carried out their own private trading on the exchange.<\/p>\n

The CFTC refrains from labeling this insider trading, but it does point out that none of the house accounts were monitored or subject to safeguards designed to prevent fraud or manipulation. The allegation also suggests that Binance staff members might not adhere by the “relatively new” insider trading regulation of the exchange.<\/p>\n

In response, Changpeng Zhao, CEO of Binance, labeled the complaint “unexpected and disappointing” and an “incomplete recitation of facts.” He also refuted the claim that the exchange engages in profitable trading against its own clients. CZ mentioned that Binance worked cooperatively with the CFTC for more than two years.<\/p>\n

Since then, platform users have withdrew $1.6 billion<\/a>, a huge increase in withdrawals, and some experts point out that Binance’s reserves may be at risk.<\/p>\n

What could this mean for Binance, as an entity, and for the crypto market overall? According to the popular YouTuber TechLead<\/a>, this last action by the U.S. government likely spells eventual total disaster for the exchange and its founder. He compares CZ’s position to other crypto founders targeted by the authorities, such as TerraLuna’s Do Kwon or Three Arrow Capital’s co-founder Kyle Davies. In TechLead’s view, CZ is likely to become a fugitive as well, and the business would lose all of its customers and will eventually be forced to close down.<\/p>\n