Bitcoin falls to $25,000 after SEC lawsuit against Binance
By Álvaro Estevez / Alejandra Zamora
Date: Tuesday 06 Jun 2023
(Sharecast News) - There´s been a dramatic turn of events in the cryptocurrency market. Bitcoin (BTC) has plummeted 3.6% in the last 24 hours and has retreated to $25,790, while Ethereum (ETH) has dropped a similar percentage and stands at around $1,810 following the Securities and Exchange Commission's (SEC) regulatory action on Binance.
In mid-afternoon Monday, the US regulator filed a complaint against the cryptoasset exchange and also its founder, Changpeng Zhao, charging them with 13 counts of "a variety of securities law violations." Among other things, the SEC alleged that, "while Zhao and Binance publicly claimed that U.S. customers were restricted from transacting on Binance.com, Zhao and Binance in reality subverted their own controls to secretly allow high-value U.S. customers to continue trading on the Binance.com platform."
The agency chaired by Gary Gensler also asserted that "while Zhao and Binance publicly claimed that Binance.US was created as a separate, independent trading platform for U.S. investors, Zhao and Binance secretly controlled the Binance.US platform's operations behind the scenes."
"Big cryptocurrency institutions' misfortune could shake the market, but the cryptocurrencies, themselves, remain impressively resistant to scandals in crypto exchanges, and price dips could be interesting opportunities to buy the assets," explained Ipek Ozkardeskaya, senior market analyst at Swissquote Bank.
According to the expert, "in the medium run, rising interest rates pause a higher risk to cryptocurrency valuations than another crypto-exchange scandal."
On the other hand, Bob Ras, co-founder of Sologenic, indicated to the media outlet 'CoinDesk' that, while the Binance news "obviously led to a big sell-off, the news itself wasn't exactly surprising." "Rumors had been swirling for some time about forthcoming action against Binance," he stated, while noting he wasn´t convinced "that we are going to experience massive liquidations," similar to those following the 2022 implosions of Luna, Celsius and FTX.
"Back then, we saw a great many forced sellers. I don't think there are nearly as many forced sellers now as there were back then. I suspect that we'll likely be in for a gradual recovery here," he added.
Joe DiPasquale, CEO of BitBull Capital, also defends this thesis and believes that "unless any major developments impact Binance's functioning, we don't think the market is likely to lose a lot more."
Strahinja Savic, head of data and analytics at crypto platform FRNT Financial, was also keen to point out that Binance had "continued to operate relatively normally since it was charged by the CFTC" earlier this year. "US users have also long been barred from accessing Binance. It's hard to pin down an element of this story that really changes the status quo," he noted.
"It's important to keep in mind that Binance's regulatory issues do not implicate Bitcoin. It's hard to imagine any traders looking at the SEC's allegations and thinking that anything there is damaging for the Bitcoin bull thesis. However, given the extent of cross collateralization in the space, paired with exaggerated correlations, it's not surprising to see Bitcoin selling off," Savic added,
It should be noted that rumors swirled on Monday about a possible succession of Zhao at the head of Binance. Also, according to various reports, Zhao is considering reducing his stake in Binance.US, the exchange's US subsidiary, after regulatory scrutiny of the company and the cryptocurrency sector as a whole intensified. In recent years, Binance has been highly questioned for its transparency practices and different media have published that the company has not always acted in the best way.
In other market news, there have been notable drops in Binance's native token, Binance coin (BNB), of up to 8%. Ripple (XRP) has fallen almost 4.5%, Cardano (ADA) and Polygon (MATIC) have plunged 6%, and Solana (SOL) and Dogecoin (DOGE) have plummeted over 7%.
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