The SEC has pledged to crack down on the industry this year - and the Binance lawsuit is the most significant step so far. The crypto world has been under scrutiny since the collapse of FTX in November 2022. Sam Bankman-Fried is currently facing several federal charges over the collapse of the $250 billion exchange FTX last year What could regulation mean in the long-term? 'But the fact remains that the industry has improved over time and these "crisis moments" contributed to that. ![]() ![]() Many of these "cleanups" came too late and were arbitrarily applied, and focused on punishment rather than investor protections. 'Regulators haven’t been perfect by any means. Matt Hougan, chief investment officer at Bitwise Asset Management, a major provider of crypto index funds, told Barron's: 'Historically, every time regulators have stepped in to clean up crypto, it has ultimately been a good thing for the industry. Some investors, however, see the SEC's actions as helpful in the long-term in aiding regulation in the space - even if the market takes a fall in the short-term. 'The golden rule for crypto buyers remains not to invest any money you aren’t willing to lose in its entirety.' 'Crypto is a highly volatile asset in a market which is lightly regulated, so investors must be willing to swallow a whole load of risk before diving in,' she added. Laith Khalaf, Head of Investment Analysis at British firm AJ Bell, said that it 'feels like the crypto bubble is suffering death by a thousand punctures.' The alleged co-mingling of customer money between FTX and an affiliated crypto hedge fund called Alameda Research, both of which Bankman-Fried owned, was integral to the meltdown of the exchange. One of the most shocking allegations waged against Binance by the SEC was that the company exercises control of assets held on its platform, 'permitting them to commingle customer assets or divert customer assets as they please, including to an entity Zhao owned.' The disgraced trader is currently facing several federal charges over the collapse of the $250 billion exchange. 'We should be prepared for a big selloff down to $22,000,' he said.Īrguably the biggest immediate risk is that fears over Binance create a similar 'run on the bank' situation to what preceded the collapse of the FTX exchange, founded by Sam Bankman-Fried, last year. The markets were rocked by the news about Binance - the largest crypto trading platform in the world What does it mean for the crypto markets?Īlex Kuptsikevich, an analyst at broker FxPro told Barron's that people should be prepared for the Bitcoin price to fall another 15 percent. ![]() 'It's another blow to the crypto industry and the crypto exchanges of the world,' said Tony Sycamore, market analyst at IG Markets, of the SEC suit. ![]() Despite recovering somewhat to trade at $25,772 the next day, it marks a significant decline since last June when it was trading at $31,351.Įthereum was also hit, trading down 2.66 percent, while Binance's BNB cryptocurrency fell to a near three-month low of $278.20 after the price tumbled 9.2 percent following the news. Prices appeared to reflect some pessimism about the future of the market - as Binance is by far the largest crypto trading platform in the world.īitcoin fell more than five percent following the news, its worst daily decline since mid-April. Binance customers made net withdrawals of nearly $780 million in 24 hours after the crypto platform was accused by the SEC of a 'web of deception' to evade US laws What happened following the Binance news?Īccording to data firm Nansen, Binance saw net outflows of $778.6 million of crypto tokens and Binance.US registered net outflows of $13 million in the 24 hours since the news of the lawsuit broke.ĭespite the exchange stating repeatedly that it has the reserves to cope with a rush of withdrawals, the crypto markets were rocked.
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