- Binance Coin (BNB) experienced a significant decline of 9.82% to a two-month low following the SEC’s legal action.
- The lawsuit alleges unlawful activities by Binance, reflecting stricter regulatory measures on cryptocurrencies.
- Binance faced multiple legal issues, including allegations of fund misuse and unregistered offerings to U.S. residents.
The value of BNB, the cryptocurrency developed by Binance experienced a significant decline of approximately 10% subsequent to the Securities and Exchange Commission’s legal action against the leading global crypto exchange.
The lawsuit alleges that Binance was engaged in unlawful activities within the United States. This drop in value represents the largest single-day decrease observed this year, highlighting the ongoing efforts of U.S. regulatory authorities to enforce stricter measures on cryptocurrency enterprises.
As a result, Binance Coin (BNB) experienced a significant decline, dropping by 9.82% to reach a two-month low of $275.29 as of 5 p.m. on Monday. The decline began shortly after the Securities and Exchange Commission (SEC) announced its lawsuit against Binance, marking the second civil complaint targeting the crypto exchange in recent months. The earlier lawsuit was filed by the federal Commodity Futures Trading Commission.
Over the past week, the value of BNB has fallen by nearly 12%, and since April, it has experienced a decline of more than 18%, according to CoinGecko’s data.
In addition to BNB, other cryptocurrencies also faced a downturn on Monday. Bitcoin, for instance, dropped by over 5.5% to hit a two-month low of $25,620, while Ethereum fell by nearly 5% to $1,803, and Dogecoin experienced a decrease of more than 8% to just under 7 cents.
According to the Securities and Exchange Commission (SEC), Binance and its founder Changpeng Zhao are accused of misusing customer funds. The allegations state that funds were diverted to an entity owned by Zhao called Sigma Chain, which engaged in “manipulative trading” to inflate trading volumes on the Binance exchange.
Moreover, the complaint further claims that although Binance and Zhao portrayed their U.S. subsidiary as an independent trading site, they actually maintained control behind the scenes. It is also alleged that Binance allowed certain U.S. customers to use its main exchange.
Zhao has denied these allegations, referring to the lawsuit as “unjustified” and criticizing the SEC’s actions as misguided in their focus on the crypto industry. Binance has encountered a series of legal issues in recent months, coinciding with the uncertain state of crypto markets following a decline last fall known as the “crypto winter.”
In March, the Commodity Futures Trading Commission (CFTC) filed a complaint in federal court, accusing Binance and Zhao of offering crypto futures and derivatives to U.S. residents without registering these offerings with the CFTC. The lawsuit also implicates the former chief compliance officer, Samuel Lim, for aiding and abetting Binance’s violations of U.S. laws.
Additionally, Binance faced scrutiny for internal asset movements between August and December 2022, involving approximately $1.8 billion transferred to hedge funds without notifying customers, who were previously informed that the tokens were fully backed.
It was reported in February that these movements bore a resemblance to similar actions undertaken by the bankrupt crypto company FTX. Furthermore, Binance withdrew from a non-binding agreement in November to acquire FTX’s non-U.S. operations after FTX experienced a collapse due to liquidity issues caused by substantial cryptocurrency withdrawals from its platform.
Meanwhile, Binance cited the inability to address FTX’s liquidity challenges as the reason for pulling out of the agreement.
