Bitcoin collides as crypto exchange giant Binance accused of ‘web of deception’ by US regulator
- Binance is the world’s largest cryptocurrency exchange
- The SEC has filed 13 charges against Binance, including mishandling of funds
- The price of Bitcoin and Ethereum has plummeted since the news
Leading cryptocurrencies have taken a hit after the US regulator announced plans to sue leading exchange Binance amid a wider crackdown on the industry.
According to data company Nansen, investors have raised around $790 million from Binance and its US subsidiary in the past 24 hours.
The US Securities and Exchange Commission this week charged Binance, its CEO Changpeng Zhao and the operator of US affiliate Binance.US with a “web of deception” to circumvent US securities laws.
Crackdown on crypto: US regulator sued Binance and its CEO Changpeng Zhao (pictured) for mishandling funds
The regulator alleged in 13 indictments that the exchange artificially inflated its trading volumes, diverted client funds and failed to ban US clients from its platform.
SEC chairman said: “They tried to get around US securities laws by announcing sham checks that they ignored behind the scenes so they could keep high-quality US clients on their platforms.
“The public should be wary of investing their hard-earned assets with or on these illegitimate platforms.”
Binance said it was “disheartened” by the decision to file a lawsuit because it had “actively cooperated with the SEC’s investigations.”
“All user assets on Binance and Binance-affiliated platforms, including Binance.US, are safe and secure, and we will vigorously defend against allegations to the contrary.”
The filing comes as regulators vow to use existing laws to stamp out fraudulent activity in the crypto industry following the collapse of Binance rival FTX last November.
Bitcoin fell 5 percent after news of the lawsuit, its worst daily drop since mid-April.
The price recovered somewhat this morning to trade at $25,772, but it marks a significant drop since last June when it traded at $31,351.
Ethereum is trading up 2.66 percent at $1,820, while Binance’s BNB cryptocurrency fell to a near-quarterly low of $278.20 after the price fell 9.2 percent on Monday.
Laith Khalaf, head of investment analysis at AJ Bell said: “The robust language used by the SEC, along with the lengthy list of indictments, suggests that this latest fiasco to flood the crypto market will continue for some time to come.
“Bitcoin price has plummeted on the news, and right now it feels like the crypto bubble has a thousand punctures.”
The Commodity Futures Trading Commission filed its own lawsuit against Binance in March, accusing the exchange, which is registered in the Cayman Islands, of operating illegally in the US. It is also being investigated by the Department of Justice.
The UK’s own regulator sounded the alarm on Binance two years ago, warning consumers that the exchange had “no authorization of any kind” to conduct regulated activities in the UK.