Binance attacked by the US regulator, cryptocurrencies tremble

The Binance app open on a smartphone. This photo was taken in Atlanta, USA, in November 2022. AFP - MICHAEL M. SANTIAGO

Text by: Agnieszka Kumor

2 min

The largest cryptocurrency exchange platform in the world, Binance, is in the sights of American justice. The financial derivatives authority, the CFTC, blames the company and its boss? Changpeng Zhao, for wilfully circumventing U.S. regulations.

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While several bills are being discussed in Congress, the US authorities are not wasting time. In the document filed in federal court in Illinois, the regulator asks that Binance be banned from registering and selling certain financial products in the United States.

The Wild West of cryptocurrencies

It has been a while since the Commodity Futures Trading Commission in charge of regulating stock exchanges, where commodities are traded (CTFC), as well as its stock market counterpart, the powerful policeman of the markets, the Securities and Exchange Commission (SEC) denounce the practices of players in the cryptocurrency community. Digital assets, which are extremely volatile, are traded in a legal vacuum. It's a bit like the Wild West of cryptocurrencies and regulators want to put an end to it.

They accuse Binance of having sold products to US customers by not complying with financial regulations, while they had undertaken not to solicit users in the United States. In particular, the CFTC states that "on instructions from (Changpeng) Zhao, Binance has recommended that its employees and customers bypass (regulatory) compliance controls to maximize its profits." Also, Binance reportedly chose not to ask its U.S. users for proof of identity, as required by U.S. financial regulations, according to the filing Monday.

Are cryptocurrencies benefiting from the banking crisis?

For CFTC Chairman Rostin Behnam, this should sound like a warning to everyone in the digital asset community. According to experts, the debacle of the US banks Silvergate, Silicon Valley Bank and Signature Bank and the banking crisis that followed it greatly benefited the cryptocurrency market. The most famous of them, Bitcoin, has regained more than 30% of its value in two weeks.

On the other hand, the blow now dealt by the regulator to Binance has had an immediate effect on the cryptocurrency community. Bitcoin has thus fallen to its lowest level in ten days, at $ 26,543. And the Binance Coin (BNB), cryptocurrency attached to the eponymous platform and fourth digital currency by global valuation, it lost more than 6%.

As for the platform and its boss, Changpeng Zhao, they say they have been working with the CFTC for more than two years and say they are disappointed that the regulator has gone so far as to take legal action against them.

► Read also: The Chinese giant of cryptocurrencies Binance authorized in France

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• United States
• Cryptocurrencies
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