The CFTC lawsuit against Binance frightened the market, which led to massive declines in the broader crypto market and the price of Bitcoin. However, the exchange’s CEO gave customers confidence by uploading a blog and managed to clear some doubts about the Binance cryptocurrency exchange.
- It was a bearish Tuesday, with BTC/USD decreasing by 2.79% at $26,921.
- Bitcoin plummeted to its lowest level since March 17 after the regulator charged the crypto exchange for possible regulatory breaches.
- Binance CEO dismissed the disappointing complaint.
CFTC sued Binance; Bitcoin drops
The Commodity Futures Trading Commission (CFTC) of the United States has filed a lawsuit against Binance. The lawsuit states that Binance operates against trading and derivatives laws. The complaint was filed on March 27, Monday. It claimed that the global crypto exchange supported its futures trading services to American users without seeking a derivatives license.
The US regulator filed the complaint in the US District Court for the Northern District of Illinois. According to the lawsuit, the company knowingly offered unregistered crypto derivative goods in the US under federal law by charging the cryptocurrency exchange and its CEO, Changpeng Zhou.
According to the lawsuit, Binance operated a derivatives trading business in the US that permitted trades for cryptocurrencies like bitcoin (BTC), which was referred to in the lawsuit as a “commodity.”
Furthermore, the CFTC said that although Binance has operated in the US since 2019, it had never formally registered with the government or followed US laws. Instead, it used a purposely complicated global organizational structure to avoid regulation.
Additionally, the CFTC claims that Binance failed to put into practice the fundamental regulatory standards required to halt and identify money laundering and the financing of terrorism. It also did not demand consumers present identity verification before trading.
The federal authority demanded the court impose financial penalties, trading and registry restrictions, and other sanctions against the exchange. Moreover, the CFTC has requested to ban Binance and CZ from engaging in any activity described in this case.
How did Bitcoin react?
-The lawsuit is meaningful given a widespread belief in the cryptocurrency community that the CFTC won’t randomly pursue minor players. Bitcoin hit ten-day lows as FUD over Binance’s lawsuit. Thus, it weighed on the market’s sentiment and caused a slump in the overall crypto market. However, when Zhao posted his reaction blog and the dust cleared, Bitcoin recovered to $27,000 support.
Zhou is disappointed and active in defending against the lawsuit
Binance CEO Changpeng Zhao rejected the accusations in a devoted reply to the allegation. He called the CFTC’s charge “unbelievable” and “disappointing,” given that the exchange has been working with the agency for over two years.
Zhao praised the exchange giant’s technology, including its know-your-customer program.
Furthermore, he claimed he had two accounts at Binance. One for his Binance Card and the second for his cryptocurrency assets. He noted he exchanged crypto to settle for personal costs or the Card.
Binance’s CEO stated that he disagrees with the claims made in the lawsuit. He further said that at first glance, the complaint appears to have an incomplete presentation of the facts.
Meanwhile, a spokesman for Binance stated the firm would remain engaging with regulators. The spokesperson claimed that the exchange took major measures to guarantee that US users are not present on its site.
As Changpeng Zhao tried to clear the doubt of the Regulator, Bitcoin has repetitively put the $27,000 support level to the test. And now, in the American Trading Session, it has dropped below this threshold.