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.


Get the day’s top crypto news and insights delivered to your email every evening. Subscribe to Blockworks’ free newsletter now.


Want alpha sent directly to your inbox? Get degen trade ideas, governance updates, token performance, can’t-miss tweets and more from Blockworks Research’s Daily Debrief.


Can’t wait? Get our news the fastest way possible. Join us on Telegram and follow us on Google News.


Tags

upcoming event

MON - WED, MARCH 18 - 20, 2024

Digital Asset Summit (DAS) is returning March 2024. This year’s event will be held in our nation’s capital, where industry leaders, policymakers, and institutional experts will come together to discuss the latest developments and challenges in the ever-evolving world of cryptocurrency. […]

upcoming event

MON - WED, SEPT. 11 - 13, 2023

2022 was a meme.Skeptics danced, believers believed.Eventually, newcomers turned away, drained of liquidity and hope.Now, the tide is shifting and it’s time to rebuild. Permissionless II is the brainchild of Blockworks and Bankless. It’s not just a conference, but a call […]

recent research

Curve's Stablecoin and Lending Market

Research

AMMs are at the root of everything elegant and useful in DeFi.That's why Curve put LLAMMA at the center of its lending protocol.

/

article-image

DeSantis says that the Biden administration will ban Bitcoin. Good luck with that.

article-image

Those using crypto to pay for accommodation, restaurants, activities or shopping will be dealt with “firmly,” Bali’s governor reportedly said

article-image

Worldcoin brought in the vast majority of the capital this week, but there were other standouts

article-image

Criminal behavior will get you to the bottom of this list

article-image

As markets teeter with uncertainty, both gold bugs and bitcoin aficionados are perking up, spurred by murmurs of a potential change in policy

article-image

OKX has also filed to become a Digital Asset Service Provider in France, which could take up to six months, according to the company