Binance under fire: Bitcoin and crypto under pressure

Binance, the world's largest exchange, has been sued by the Securities and Exchange Commission (SEC). Bitcoin and the entire crypto market took a hit as its prices fell. All the events in a row.

Binance is facing allegations from the U.S. Securities and Exchange Commission (SEC). As revealed in the evening hours of June 5, the Securities and Exchange Commission (SEC) is accusing the world's largest crypto exchange of violating U.S. federal securities laws. The Bitcoin price and the crypto market have fallen significantly in the wake of the allegations made public by the SEC. The current price is €23,947 and has fallen 4.2 percent in the past 24 hours. Over the week, the price has fallen 7.25 percent. Over the past month, the price has fallen 8 percent.

Binance: The allegations in a row

According to the indictment alleged Binance violated U.S. federal securities laws and enriched itself with billions of U.S. dollars while putting investors' assets at risk. Binance allegedly illegally induced US investors to buy, sell and trade crypto securities through its unregistered trading platforms Binance.com and Binance.US.

It is further alleged that Binance, its CEO Changpeng "CZ" Zhao, as well as the companies BAM Trading (umbrella company of Binance US) and BAM Management only feigned measures to prevent manipulative trading practices on the Binance US platform. In reality, these safeguards did not exist. Binance and BAM Trading, under the direction and control of Zhao, allegedly offered three essential securities market functions - exchange, broker-dealer and clearing house - on the Binance platforms without the necessary registration with the SEC, according to the indictment.

SEC demands repayment of funds

The SEC further alleges that the defendants intentionally attempted to circumvent U.S. regulations while offering securities services to U.S. clients. This allegedly exposed billions of U.S. dollars in funds of U.S. investors to risk. The SEC is seeking a final court order banning Binance. The SEC also wants Binance to repay their unlawfully obtained profits with advance interest. The suit had been filed in Columbia District Court because the defendants had not registered with the SEC as an exchange, broker-dealer or clearing house in this district.

Bitcoin and Co. in negative trend: What investors need to know now

However, in a statement made public, Binance assures that investors' funds are safe. In addition, according to Changpeng Zhao, the company plans to move into vigorously defend against the lawsuit.

Jonas Jünger, Binance Head Germany, made the following statement:

"We regret the SEC's recent action. From the beginning, we have focused on transparency and cooperation in our work with the SEC to clarify all open questions. We respect the regulator's decision and remain open to all questions surrounding Binance."

“The BNB token is not a security, but a native token. Moreover, BUSD is not a security. We are in close contact with the relevant authorities to clarify and clear up any misunderstandings and are confident that we will succeed."

If the allegations against the crypto exchange are confirmed, however, investors can look forward to even more turmoil. At least in the short term, it is not unlikely that the rate and the crypto market will continue to decline in the event of a negative outcome for Binance. After all, we are dealing with the world's largest crypto-exchange.

In the long run, however, the crypto market should not suffer deeper wounds from the Binance affair. For brave investors, there could even be an opportunity to buy cryptocurrencies at a lower price.

In any case, Jonas Jünger emphasizes that all customer assets on Binance are safe:

“All user assets on Binance and Binance's subsidiary platforms, including Binance.US, are safe and secure. We maintain a proof-of-reserve system that allows users to verify their assets using a Merkle tree." To be continued, of course.