David Canellis

Crypto is holding up surprisingly well despite the SEC-imposed doom wafting over the US, having only shed 2.5% from its total market capitalization.



But the 18 tokens (excluding BUSD) listed as crypto securities in the SEC’s <a href="https://blockworks.co/news/sec-sues-coinbase">Coinbase</a> and <a href="https://blockworks.co/news/binance-doubled-down-illegal-activity">Binance</a> aren’t doing so hot, having collapsed more than 11% on average.



Bitcoin (<a href="https://blockworks.co/price/btc" target="_blank" rel="noreferrer noopener">BTC</a>) and ether (<a href="https://blockworks.co/price/eth" target="_blank" rel="noreferrer noopener">ETH</a>) — not featured in either court document — are down only about 2% each as of 9 am ET.



Monday’s Binance suit “led to an extreme selloff in the span of less than an hour, where we witnessed long liquidations totaling almost $300 million — a 2023 daily record as Bitcoin dropped over 5% and Ethereum around 4%,” Mike Tauckus, head of trading at BitOoda wrote in an analyst note.&nbsp;



Coinbase’s case was disclosed the next day, but the market rallied in the afternoon to erase the Binance-associated losses almost completely.



Due to its relatively small market caps and illiquid market, <a href="https://blockworks.co/price/coti" target="_blank" rel="noreferrer noopener">COTI</a> underperformance (down 20%) is somewhat expected after it was labeled a security.&nbsp;



More robust projects are also struggling after the SEC’s claims, however.&nbsp;



The sandbox (<a href="https://blockworks.co/price/sand" target="_blank" rel="noreferrer noopener">SAND</a>), algorand (<a href="https://blockworks.co/price/algo" target="_blank" rel="noreferrer noopener">ALGO</a>), cardano (<a href="https://blockworks.co/price/ada" target="_blank" rel="noreferrer noopener">ADA</a>), binance coin (<a href="https://blockworks.co/price/bnb" target="_blank" rel="noreferrer noopener">BNB</a>), <a href="https://blockworks.co/price/flow">FLOW</a>, filecoin (<a href="https://blockworks.co/price/fil" target="_blank" rel="noreferrer noopener">FIL</a>), polygon (<a href="https://blockworks.co/price/matic" target="_blank" rel="noreferrer noopener">MATIC</a>), chiliz (<a href="https://blockworks.co/price/chz" target="_blank" rel="noreferrer noopener">CHZ</a>), cosmos (<a href="https://blockworks.co/price/atom" target="_blank" rel="noreferrer noopener">ATOM</a>), internet computer (<a href="https://blockworks.co/price/icp" target="_blank" rel="noreferrer noopener">ICP</a>), voyager (<a href="https://blockworks.co/price/vgx">VGX</a>), decentraland (<a href="https://blockworks.co/price/mana">MANA</a>), axie infinity (<a href="https://blockworks.co/price/axs">AXS</a>), <a href="https://blockworks.co/price/near">NEAR</a> and solana (<a href="https://blockworks.co/price/sol">SOL</a>) have all collapsed between 10% and 18% since word of the SEC lawsuits first broke.



<figure class="wp-block-embed is-type-wp-embed is-provider-flourish wp-block-embed-flourish"><div class="wp-block-embed__wrapper">
<iframe loading="lazy" class="wp-embedded-content" sandbox="allow-scripts" security="restricted" title="Interactive or visual content" src="https://flo.uri.sh/visualisation/14077299/embed#?secret=gvUuPyi0vz" data-secret="gvUuPyi0vz" frameborder="0" scrolling="no" height="575" width="700"></iframe>
</div></figure>



With $12.6 billion collectively wiped from their market caps, those tokens are responsible for more than 25% of crypto’s total losses since the SEC sued Binance on Monday.&nbsp;Coinbase stock, meanwhile, has tanked 15.5%.&nbsp;



On average, all tokens listed in either lawsuit are down 14% over the past month, but still up 9% year to date.



<h2 class="wp-block-heading">SEC shouldn’t phase crypto volatility traders&nbsp;</h2>



Markets have reacted sharply to the SEC’s view on those tokens, but industry insiders aren’t totally sold on the agency’s reasoning.&nbsp;



Some claim <a href="https://blockworks.co/news/sec-coinbase-binance-security">evidence</a> provided <a href="https://blockworks.co/news/the-sec-says-these-crypto-assets-are-securities-their-reasoning-is-wrong">relies on technical misunderstandings</a> and misses key context.



Still, SEC chair Gensler has defended his agency’s actions, insisting that crypto startups know <a href="https://blockworks.co/news/gensler-crypto-firms-know-exactly-how-to-register-they-just-dont-want-to">exactly how to register</a> but simply don’t want to.



All this while implied <a href="https://www.tradingview.com/script/tqitSsyG-Bollinger-Band-Width-Percentile" target="_blank" rel="noreferrer noopener">volatility</a> for bitcoin and ether are sitting at historically low levels. “This low volatility regime may stick around until the market can make a sustained push through one end of the narrowing range,” BitOoda’s Tauckus said.



“A conscientious trader can take advantage of the current low liquidity and complacency in the market to profit via several low risk/high reward scenarios.”



Updated Jun. 9, 2023 at 10:10 am ET: Updated figures.



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Binance

Alleged crypto securities tank alongside BNB after SEC suits

Casey Wagner

Crypto markets sank late Monday morning in New York on news that the largest global crypto exchange Binance is facing several charges from the SEC. 



Bitcoin (<a href="https://blockworks.co/price/btc">BTC</a>) and ether (<a href="https://blockworks.co/price/eth">ETH</a>) lost as much as 2.5% and 2%, respectively at time of publication. Binance’s native <a href="https://blockworks.co/price/bnb">BNB</a> token fell as much as 7% immediately after the lawsuit announcement.&nbsp;



<a href="https://blockworks.co/news/binance-changpeng-zhao-face-sec-charges">The SEC alleges Binance misused consumer funds</a> and engaged in unauthorized security sales, according to court documents released Monday. The agency also claims BNB and Binance’s stablecoin, <a href="https://blockworks.co/price/busd">BUSD</a>, which briefly depegged Monday, are securities.&nbsp;



“Binance and BAM Trading, under [Changpeng] Zhao’s leadership and control, have unlawfully offered three essential securities market functions—exchange, broker-dealer, and clearing agency—on the Binance Platforms without registering with the SEC. Acutely aware that U.S. law requires registration for these functions, Defendants nevertheless chose not to register, so they could evade the critical regulatory oversight designed to protect investors and markets,” the court filing read.&nbsp;



The SEC claims that BAM Trading’s staking program is an investment contract and therefore a security, which Binance failed to register with the agency.&nbsp;



Read more: <a href="https://blockworks.co/news/sec-allegations-against-binance">The SEC Allegations Against Binance: How Bad Is It?</a>



The charges are reminiscent of allegations Sam Bankman-Fried faces over his now-collapsed exchange, FTX. The SEC claims Bankman-Fried transferred consumer funds from the exchange to a trading entity he owned; Alameda.&nbsp;



The SEC uses similar language in its Binance suit, explicitly noting that consumer funds were allegedly traded with third parties.



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Markets Dip Red After SEC Sues Binance

Sebastian Sinclair

The native digital asset of the world’s largest exchange is facing significant sell-side pressure after the US commodities regulator announced legal action against Binance and its CEO.



The CFTC filed suit against the exchange and CEO Changpeng Zhao for allegedly violating trading and derivatives laws. Binance’s former chief compliance officer, Samuel Lim, is also named as a defendant in the suit.



Zhao said in a <a href="https://www.binance.com/en/blog/from-cz/czs-response-to-the-cftc-complaint-2408916493005890282" target="_blank" rel="noreferrer noopener">statement</a> late Monday he disagrees with the “characterization of many of the issues” alleged in the CFTC’s complaint. 



A spokesperson told Blockworks the company has made “significant investments” to ensure it did not have US users active on its platform — from boosting compliance staff to implementing market surveillance and investigative tools.



Binance’s BNB token — the utility of which is derived from reducing fees on the exchange — fell more than 6.2% on Monday to $308, the hardest hit among the top 20 cryptos by market value.&nbsp;



BNB is the fourth-largest crypto by total market capitalization with a value of $48.7 billion, <a href="https://www.blockworksresearch.com/assets">Blockworks Research data shows</a>.



<h3 class="wp-block-heading">Broader market</h3>



Other exchange tokens have fared better.&nbsp;



Rival exchange Huobi’s native token (HT) was down 3%, as of 7:30 p.m. ET, while Crypto.com’s token (CRO) had shed 4% on the day. LEO, which is used for trading fees and other services for the Bitfinex exchange — was down about 3%.



Those moves are in line with the broader digital asset market sell-off over the last 24 hours.



Bellwether asset bitcoin has shed 3.2% of its value to $27,000, technically its steepest decline since the start of the month. The industry’s total market capitalization, which measures the value of all crypto in circulation, has dipped 2.3% to $1.17 billion.



It appears the CFTC is seeking to strike a legal <a href="https://blockworks.co/news/reactions-to-cftc-lawsuit-binance">hammer blow</a> against the exchange in an attempt to do what others around the world have failed so far — bring Binance under their purview.



“Obviously if Binance goes under due to overwhelming fines then it&#8217;s unlikely BNB is worth much anymore,”&nbsp; Xavier Ekkel, founder of DeFi trading platform prePO told Blockworks.



The asset, however, may retain some “ghost value,” similar to how FTX’s native token, FTT, managed to retain a portion of its value despite the collapse of Sam Bankman-Fried’s empire, Ekkel added.



A hit to BNB’s value follows from the start of the month’s turmoil for another Binance branded token — its BUSD stablecoin — which faced regulatory actions from the New York Department of Financial Services (NYDFS) and the SEC. Several on-chain metrics are now pointing to a <a href="https://blockworks.co/news/the-end-of-busd-on-chain-metrics">swift end for BUSD</a>.



Binance declined to comment on BNB.



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Binance Token BNB Falls 6% after CFTC Files Suit

Crypto prices dipped moments after news broke Monday of the CFTC <a href="https://blockworks.co/news/bitcoin-and-ether-are-commodities-says-cftc-in-binance-lawsuit">suing Binance and affiliated executives</a> on allegations of trading and derivatives violations.&nbsp;



<a href="https://blockworks.co/price/bnb" target="_blank" rel="noreferrer noopener">BNB</a>, Binance’s native token, lost around 5% in short order.&nbsp;



Bitcoin (<a href="https://blockworks.co/price/btc" target="_blank" rel="noreferrer noopener">BTC</a>) 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%.&nbsp;



Ether (<a href="https://blockworks.co/price/eth" target="_blank" rel="noreferrer noopener">ETH</a>), which lost nearly 7% on Nov. 11, was trading about 3.5% lower by early Monday afternoon. 



&#8220;Based on recent actions taken by US regulators, the CFTC taking actions against Binance isn&#8217;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.&nbsp;



“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,&#8221; 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.”



<a href="https://blockworks.co/tag/binance" target="_blank" rel="noreferrer noopener">Binance</a> 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.&nbsp;



“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.



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

Shalini Nagarajan

Crypto startup Ankr says a former employee instigated the <a href="https://blockworks.co/news/binance-chain-apps-5m-hack" target="_blank" rel="noreferrer noopener">$5 million theft</a> from its platform earlier this month.



A malicious hacker exploited a smart contract for one of Ankr’s staking rewards tokens, aBNBc, on Dec. 2. They&#8217;d manipulated a bug in its code that enabled <a href="https://twitter.com/peckshield/status/1598508401755144196" target="_blank" rel="noreferrer noopener">unlimited minting</a> of the token, deployed to Binance-branded BNB Chain.



In a Tuesday <a href="https://www.ankr.com/blog/after-action-report-our-findings-from-abnbc-token-exploit/" target="_blank" rel="noreferrer noopener">blog</a>, the decentralized finance protocol said a former team member was behind the attack. It didn’t name or identify the individual. 



“A former team member (who is no longer with Ankr) acted maliciously to conduct a supply chain attack, inserting a malicious code package that was able to compromise our private key once a legitimate update was made,” Ankr said.



Crypto intelligence firm Arkham had already <a href="https://twitter.com/ArkhamIntel/status/1598620203457208320" target="_blank" rel="noreferrer noopener">noted</a> the possibility of an inside job after on-chain sleuths linked related transactions to an Ankr deployer.



Ankr added: “Unfortunately, internal bad actors can affect any protocol and we are working on shoring up internal HR processes and safety measures to strengthen our security posture going forward.”&nbsp;



The team is now working with law enforcement to potentially prosecute the former team member.



Previously, Ankr <a href="https://blockworks.co/news/ankr-exploit-causes-collateral-damage" target="_blank" rel="noreferrer noopener">explained</a> the attacker “minted an excess of aBNBc out of thin air” by uploading a new contract that allowed minting without authorization checks. They proceeded to swap it for other tokens on decentralized exchanges.&nbsp;



Overall, the attacker minted 60 trillion aBNBc across six transactions. They swapped some for USDC before bridging the stablecoins to Ethereum and washing them through crypto mixer Tornado Cash.



<h3 class="wp-block-heading">Ankr reimbursed affected users with crypto</h3>



Shortly after the Ankr hack, a second exploit occurred on staking platform Helio, which hadn’t updated Ankr-related token prices despite aBNBc dropping more than 99%, from $303 to $1.54.



This allowed one user to borrow $16 million worth of its native stablecoin HAY by using affected Ankr tokens as collateral. They then swapped those funds for $15 million in BinanceUSD (BUSD), <a href="https://twitter.com/BlockSecTeam/status/1598625878455373824" target="_blank" rel="noreferrer noopener">according</a> to blockchain analysis firm BlockSec, before sending the haul onto Binance.



Ankr later executed a recovery plan for the community, which involved compensating its liquidity providers, lenders and other users affected by the exploit.&nbsp;



The team also helped stabilize HAY after the stablecoin depegged, although the token is yet to fully regain its intended dollar value, now trading at a touch over $0.99.



In any case, Ankr hopes multi-sig authentication for updates will ensure similar attacks are avoided moving forward. The team is also implementing background checks for employees and reviewing access rights.



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Ankr

Ankr Confirms $5M Crypto Hack Was An Inside Job

The native token of crypto exchange Binance — Binance Coin (BNB) — has set a fresh all-time high against bitcoin since word of Binance’s unexpected FTX buyout broke on Tuesday.&nbsp;



BNB hit 0.0197 BTC ($390.75) per token this afternoon, breaking its previous bitcoin (BTC) price record — set less than a week ago on Nov. 4 — by more than 14%. 



The token serves as the native asset for Binance, awarding holders discounts on trading fees alongside exposure to regular token burns, which reduce overall supply. FTX, like other prominent exchanges, has its own in-house digital asset, FTT, which has sunk 60% against the dollar over the past day.



BNB is still 45% below its peak in terms of raw US dollars. The token traded as high as $686.31 last May, per CoinGecko, which means it would need to rise more than 86% from here.&nbsp;



Still, its surging price reflects that markets consider BNB a thermometer for the overall health of Binance. Against the dollar, BNB is up around 10% over the past day, as of 12:30 pm ET — FTX’s FTT is down more than 27% over the same period.



<figure class="wp-block-embed aligncenter is-type-wp-embed is-provider-flourish wp-block-embed-flourish"><div class="wp-block-embed__wrapper">
<iframe loading="lazy" class="wp-embedded-content" sandbox="allow-scripts" security="restricted" src="https://flo.uri.sh/visualisation/11747191/embed#?secret=vzFe0GWbLS" data-secret="vzFe0GWbLS" frameborder="0" scrolling="no" height="575" width="700"></iframe>
</div><figcaption>BNB has since retraced but this chart shows its new price record</figcaption></figure>



Earlier today, Binance CEO Changpeng &#8216;CZ&#8217; Zhao tweeted details of a deal that would see his crypto exchange totally acquire one of its primary rivals in FTX. The acquisition is pending due diligence and terms agreement, and it’s unclear whether regulatory hurdles could come into play — especially pending the <a href="https://cms.blockworks.co/binance-buying-ftx-news-enough-to-pull-crypto-back/" target="_blank" rel="noreferrer noopener">outcome of the US midterm elections</a>.



The platform had been dogged by insolvency rumors ever since the balance sheet of its sister organization Alameda Research — a proprietary trading and venture capital firm also owned by FTX CEO Sam Bankman-Fried — were <a href="https://www.coindesk.com/business/2022/11/02/divisions-in-sam-bankman-frieds-crypto-empire-blur-on-his-trading-titan-alamedas-balance-sheet/" target="_blank" rel="noreferrer noopener">reported by CoinDesk</a> last week.&nbsp;



The sheet showed outsized exposure to FTT and other tokens close to Bankman-Fried, <a href="https://cms.blockworks.co/binance-ceo-goes-full-fud-in-attempt-to-bury-ftx/" target="_blank" rel="noreferrer noopener">culminating in Zhao</a> pledging to offload hundreds of millions of dollars worth of the token to reduce its market risk. Alameda CEO Caroline Ellison pushed back on aspects of the reporting, saying the accounting didn’t reflect offsetting hedges the company had in place.&nbsp;



Of the top 10 cryptocurrencies by market capitalization, excluding stablecoins, BNB is now the best performing asset against bitcoin for the year to date — by far. It’s up 69% against BTC while second-best XRP has only risen 23%.&nbsp;



Ether, on the other hand, has lost 4% of its value against bitcoin so far in 2022 and cardano has shed 29%. Solana, while now outside of the top 10 digital assets, has collapsed a whopping 62% against bitcoin over the same period.



BNB is still down 35% against the dollar this year, echoing performance right across the digital asset market. Bitcoin over the same period has lost more than half of its value.



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