Crypto Markets Stumble on Binance Legal Woes, but Not as Bad as FTX

Binance’s native token BNB dropped about 5% on the news, with bitcoin and ether also posting immediate losses before stabilizing

article-image

Aleksandra Sova/Shutterstock modified by Blockworks

share

Crypto prices dipped moments after news broke Monday of the CFTC suing Binance and affiliated executives on allegations of trading and derivatives violations. 

BNB, Binance’s native token, lost around 5% in short order. 

Bitcoin (BTC) dropped 3.8% to $26,737, before recovering to $26,917 Monday just after 12 pm in New York. On Nov. 11, 2022, the day FTX filed for bankruptcy, bitcoin lost more than 6%. 

Ether (ETH), which lost nearly 7% on Nov. 11, was trading about 3.5% lower by early Monday afternoon. 

“Based on recent actions taken by US regulators, the CFTC taking actions against Binance isn’t entirely surprising. This may be why the markets are largely nonplussed by the lawsuit,” Darius Tabatabai, co-founder of decentralized exchange Vertex Protocol, said. 

“That said, when you consider that suits have been announced against KuCoin, Kraken, and Coinbase, it certainly appears that there are headwinds that traders should consider as we move into the second quarter, and it will be fascinating to see how this all plays out in the court system,” Tabatabai added.

In the lawsuit, filed Monday in Illinois, the CFTC claims that Binance “has solicited and accepted orders, accepted property to margin, and operated a facility for the trading of futures, options, swaps, and leveraged retail commodity transactions involving digital assets that are commodities including bitcoin (BTC), ether (ETH), and litecoin (LTC) for persons in the United States.”

Binance CEO Changpeng Zhao and Samuel Lim, the exchange’s former chief compliance officer, are named in the complaint as defendants.

The lawsuit comes shortly after Binance announced it would do away with zero-fee trading for 13 bitcoin spot trading pairs. Volumes on the exchange plummeted, moving Binance’s market share down 20%, according to data from research firm Kaiko. 

“As of mid-March 2023, zero-fee trade volume accounted for a majority of total volume, clocking a high of 66%,” Kaiko analysts said in a note Monday before the lawsuit was filed.

Updated March 27, 2023 at 12:30 pm ET: Added comment from Darius Tabatabai, co-founder of decentralized exchange Vertex Protocol.


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Screenshot 2024-05-23 091855.png

Research

Bitcoin L2s aim to boost scalability while preserving decentralization and security, unlocking a better user experience, and new avenues for Bitcoin-powered innovations. However, no existing Bitcoin L2 leverages the full security of Bitcoin.

article-image

Crypto products don’t fit in “a well-balanced, long-term investment portfolio,” Vanguard reiterates ahead of potential ether fund launches

article-image

The distributions mark a 232% recovery from when withdrawals were halted in November 2022

article-image

Also, toncoin could be crypto’s next blue-chip token

article-image

I believe that the innovation happening on Bitcoin right now is what will ultimately lead to a better Bitcoin for everyone

article-image

The payments firm is exploring PYUSD’s payments use cases

article-image

Planned funds would not stake their holdings, which some say will hurt the ETFs’ appeal for certain investors