Binance is losing ground due to pressure from US regulators

CFTC Files Suit Against Binance and Changpeng Zhao
CFTC Files Suit Against Binance and Changpeng Zhao

Binance is in a vulnerable position due to pressure from US regulators. If after the collapse of FTX the platform processed 70% of all transactions on the crypto market, now the figure has dropped to 50%, according to Kaiko, writes The Wall Street Journal.

Journalists recalled the dismissal of more than a dozen top managers and at least 1,500 ordinary employees in order to optimize and prepare for a downturn in business.

Dynamics of changes in market share in cryptocurrency trading from January 1 to September 4. Data: The Wall Street Journal.

“Every battle this is the situation do or dieThe only thing that can defeat us is it’s ourselves. We have won countless times and we need to win this time too.” — Binance co-founder He Yi outlined the situation.

What is happening with the exchange will have huge consequences for the crypto industry due to its scale, journalists noted.

Industry participants and observers believe other players are poised to fill the platform’s market share. In the short term, liquidity in the market may “evaporate”, which will be reflected in lower prices, they suggested.

An unnamed institutional trader interviewed by The Wall Street Journal said his company conducted a “fire drill” to quickly move its assets out of Binance if it collapsed.

“You simply can’t quantify what would happen to the industry if the exchange disappeared, given that it is responsible for driving a huge amount of innovation and growth,” — said Innovating Capital General Partner Anthony Georgiades.

Informed sources in the US Department of Justice, in an interview with the publication, said that as a result of a multi-year investigation, Binance could face fines of billions of dollars, and its CEO Changpeng Zhao (CZ) could face criminal prosecution.

There are also complaints against the platform from the SEC.

“We have actively worked to learn from the past and continue to invest in teams and systems that keep users safe.” – said a company representative.

According to an internal exchange presentation, Binance.US’ growth opportunities are limited due to the business’s ties to Zhao and the current regulatory environment.

The implementation of the company’s roadmap is possible if CZ were to sell its shares or transfer them to a blind trust.

Dynamics of changes in the market share of cryptocurrency trading in the United States since the beginning of the year. Data: The Wall Street Journal.

On June 5, the SEC filed a lawsuit against Binance and Zhao, bringing 13 charges, including the sale of unregistered securities. On June 6, the regulator sent a request to freeze the digital assets of the American division of the exchange.

On June 9, users lost the ability to deposit dollars, which caused sales from those wishing to withdraw funds in fiat. Against this background, a discount has formed on the platform in Bitcoin quotes paired with the dollar – the figure reached ~$2200 (7.3%).

On June 17, the SEC and Binance entered into an agreement regarding client funds in the United States. The exchange resumed the withdrawal of assets, but the company warned that the situation could change.

The agency later accused Binance.US of being unwilling to cooperate. According to the regulator, the platform’s actions violate the agreements between the parties prohibiting the withdrawal of funds abroad.

According to the department, the holding company of the exchange, BAM, delayed the preparation of the requested documents. The court refused to oblige the US subsidiary of Binance to provide the SEC with expanded information regarding the processing of client assets. The company itself called the regulator’s requests “too broad” and “unreasonably burdensome.”

Recall that in September, Binance, Binance.US and the head of the platform, Changpeng Zhao, filed motions to dismiss the SEC’s claims, noting the regulator’s “implausible” arguments.

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