The United States Commodity Futures Trading Commission (CFTC) has lodged litigation against Binance, a crypto exchange, and its creator, Changpeng Zhao, accusing them of violating the law by offering cryptocurrency derivatives to customers in the U.S. without being registered.
Based on the reports, the CFTC pressed legal action against Binance on Monday in the United States District Tribunal for the Northern District of Illinois, accusing the cryptocurrency exchange of willfully breaking the law. The lawsuit alleges that Binance is engaged in trading derivatives in the United States, providing cryptocurrency trades to customers.
Lawsuit Sends crypto market tumbling
A lawsuit categorized Bitcoin, Ether, Litecoin, Tether, and Binance USD as commodities immediately impacting the market. As a result of the announcement, the value of Bitcoin decreased by approximately 3%.
However, Bitcoin managed to bounce back and regain much of its lost value as the day went on. Likewise, Binance’s BNB token experienced a significant decline of around 6% in response to the news. Furthermore, the stocks of several companies related to cryptocurrencies also suffered a drop in their value.
According to a report from Nansen, a blockchain analytics firm, Binance has seen a noteworthy decline in the quantity of Ethereum and Bitcoin held on its platform in the past 24 hours. The report reveals that the net outflow of Ethereum has reduced from $2 billion over the last seven days to around $400 million within the previous 24 hours.
Binance Accused of Deceptive Tactics by CFTC
As per the CFTC, the worldwide exchange, which includes a United States branch in Binance.US, devised a mechanism to conceal its actual scope and operations. The CFTC filing further claims that Binance intentionally uses a complex network of entities to conceal the platform’s possession, authority, and location, with CEO Changpeng Zhao holding sole accountability without any external oversight.
These allegations have sparked concerns about transparency and regulation within the cryptocurrency industry, particularly as Binance has recently faced heightened scrutiny from regulators worldwide. Although Binance has not responded publicly to the accusations, their impact has already been felt in the market, with Bitcoin and Ether experiencing a slight decline in value since the filing’s release.
In a recent press release, the Chief Counsel of the CFTC, Gretchen Lowe, accused Binance of deliberate evasion of a U.S. decree. This allegation is based on the evidence of internal chats and emails, which suggest that Binance has been directing U.S. customers to use various techniques to circumvent constraints.