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Bitcoin hovers near 2-1/2 month low as Binance SEC lawsuit rattles investors

Tan KW
Publish date: Tue, 06 Jun 2023, 05:58 PM
Tan KW
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 SINGAPORE Bitcoin prices steadied on Tuesday (June 6) but remained near their lowest in more than two months after a steep dive overnight, as investors grappled with news the US securities regulator sued crypto exchange Binance, dealing a severe blow to the industry.

Bitcoin, the world's largest cryptocurrency, was last at US$25,736 , down 0.01% on Tuesday, pinned near a more than two-month low. It had slumped more than 5% in the previous session, the largest daily decline since April 19.

The US Securities and Exchange Commission on Monday sued Binance, the world's largest cryptocurrency exchange, and its CEO Changpeng Zhao, alleging that Zhao was secretly controlling Binance.US as part of a "web of deception" to evade US laws, among other charges.

"It's another blow to the crypto industry and the crypto exchanges of the world," said Tony Sycamore, market analyst at IG Markets.

"If what (the SEC is) alleging is true ... well, Binance is the biggest, and if this is going on at the biggest, what's happening at the smallest? That is the natural link. It doesn't fill investors with confidence."

Binance's cryptocurrency fell 0.28% to a near three-month low of US$276.87, after a 9.2% plunge on Monday.

Reuters earlier reported that Binance controlled its US affiliate's bank accounts, despite claiming it was independent.

In statements, Binance said it had been cooperating with the SEC's probes and had "worked hard to answer their questions and address their concerns", including by trying to reach a negotiated settlement.

The SEC complaint is the latest in a series of legal headaches for Binance. The company was sued by the US Commodity Futures Trading Commission (CFTC) in March for operating what it alleged were an "illegal" exchange and a "sham" compliance program.

Zhao said the CFTC claims were an "incomplete recitation of facts."

The 24-hour trading volume on Binance spiked in Asia hours on Tuesday and more than doubled to US$12.48 billion, based on analytics site CoinMarketCap.

"If the SEC is successful in deeming stablecoin BUSD, Cardano's ADA, Solana's SOL, and Polygon's Matic are securities, that could kill retail interest for an important part of the cryptoverse," said Ed Moya, senior market analyst at Oanda.

"Everyone is waiting on how crypto will get regulated in the US and if too many key cryptos are deemed securities, that could mean they could get liquidated and the money might just go back into Bitcoin."

The lawsuit against Binance marks the latest development in the SEC's sweeping crackdown on the crypto industry following FTX's implosion last year. The heightened scrutiny has prompted some crypto companies to increase compliance measures, spike products and expand outside the US.

"This case is significant, and the crypto and fintech industries should pay close attention to its impact," said Wayne Huang, co-founder and CEO of XREX Inc, a blockchain-enabled financial institution operating the XREX USD-crypto exchange. 



  - Reuters


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