In June, Binance faced the SEC, so the recent lawsuit didn’t come as a surprise as we have been hearing regulatory threats throughout 2022. By December, SEC officials had already warned that 2023 would be extremely challenging for crypto companies that did not approach them. And yes, they did exactly what they said, but they haven’t achieved a definite victory yet.
Binance Lawsuit
The battle between cryptocurrency exchange Binance and the U.S. Securities and Exchange Commission (SEC) continues. The regulatory agency accuses Binance US of not cooperating during the discovery process. The SEC also highlights that Binance US’s parent company, BAM, only produced 220 documents during the discovery process.
According to the SEC, most of these materials consist of “incomprehensible screenshots and documents without dates or signatures.” Additionally, instead of providing the witnesses requested by the SEC, BAM presented its own selection of four witnesses. Meanwhile, the judge granted SEC’s request to remove the seal for 18 documents.
According to SEC documents, the company overseeing Binance US highlights the difficulty of “fully collateralizing” the exchange.
Why Does It Matter for Cryptocurrencies?
Binance is currently the world’s largest exchange in terms of trading volume, but it is not indispensable for the U.S. In fact, trading volumes for Binance US have dropped from $230 million to $3 million today. However, the problem is that the lawsuit filed against Binance US also threatens the global company. SEC officials claimed that customer assets were mixed with the exchange’s global reserves and company treasury. Although a decision made a few months ago caused confusion, there is a Binance exchange facing dozens of allegations, including turning a blind eye to Hamas operatives.
At this stage, instead of withdrawing from the country and making a settlement, Binance chose to engage in a legal battle. The prolonged duration of the lawsuit could continue to suppress the markets due to the possibility of the largest player in the industry getting into trouble.
Prior to the trial, the price of BTC reached $27,400, but quickly dropped by $800 after the documents were released. This price drop was even more significant for altcoins.
