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Coinbase binance crypto

Crypto Stocks Plunge As SEC’s Lawsuit Against Binance And Coinbase Intensfies

Scott Matherson
by Scott Matherson
2 years ago
·
Posted in Binance
Trusted Editorial content, reviewed by leading industry experts and seasoned editors. Ad Disclosure

On Monday, the United States Securities and Exchange Commission (SEC) dealt a significant blow to the crypto market by filing a lawsuit against Binance, one of the world’s largest crypto exchanges, and its CEO, Changpeng Zhao. 

The lawsuit alleges the misuse of customers’ funds and the operation of an illegal trading platform within the United States. Consequently, the news triggered a sharp decline in Bitcoin prices and crypto stocks like Coinbase Global.  

SEC Alleges Misuse of Funds and Illegal Operations by Binance

In a complaint filed in a federal court in Washington, D.C., the SEC listed 13 charges against Binance, Zhao, Binance’s CEO,  and the operator of its independent US exchange. The regulatory body accused Binance and Zhao of misusing customers’ funds, diverting them to a trading entity called Sigma Chain, which was under Zhao’s control. 

Related Reading: American Banker Highlights CBDC Development Endeavors By Ripple

Additionally, the SEC claimed that Sigma Chain engaged in manipulative trading practices, artificially inflating the trading volume of crypto asset securities on the Binance.US platform.

The regulator further asserted that Binance and its CEO commingled billions of dollars in customer assets and diverted them to a third-party entity named Merit Peak, also owned by Zhao. To address these concerns, the SEC requested a freeze on Binance’s assets and the appointment of a receiver to oversee the situation.

“We allege that Zhao and Binance entities engaged in an extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law,” said SEC Chair Gary Gensler. 

Binance responded to the SEC’s actions through a blog post, pledging to vigorously defend its platform. The company argued that the lawsuit’s impact would be limited since Binance is not a US-based exchange.

Bitcoin And Crypto Stocks Plunge

The impact of the SEC’s lawsuit against Binance and its CEO Changpeng Zhao reverberated throughout the cryptocurrency market, triggering a widespread decline. Bitcoin, the flagship cryptocurrency, experienced a notable decline in response to the regulatory developments.

Coinbase Global a prominent player in the crypto industry, was not immune to the shockwaves generated by the SEC’s lawsuit against Binance. Alongside Binance, Coinbase has also been sued by the SEC, leading to a plunge in its stock price.

The company’s stock (COIN) registered a substantial decline following the news, reflecting investor concerns about potential spillover effects from regulatory actions. COIN’s price fell from its Monday price of $66 to $51 at the time of this writing.

Coinbase (COIN) stock price chart from TradingView.com (Crypto)

COIN price plunges to $51.5 | Source: Coinbase Global Inc on TradingView.com

The downturn in Coinbase’s stock price is indicative of the overall sentiment within the market, as investors grapple with the potential implications of the SEC’s legal action against Binance and Coinbase. Uncertainty surrounding the regulatory landscape and the broader impact on the crypto industry has cast a shadow on the short-term outlook for Coinbase and other crypto-related stocks. 

The ripple effect was not limited to individual stocks but extended to the overall market sentiment surrounding cryptocurrencies. Bitcoin, the bellwether digital currency, witnessed a downward trajectory as market participants reacted to the news. 

Growing Regulatory Scrutiny Puts Pressure On Crypto Industry

The SEC’s lawsuit against Binance reflects a broader trend of increased regulatory scrutiny faced by the crypto industry. Regulators have intensified their examination of crypto firms since the FTX controversy and other similar incidents that occurred last year. 

Related Reading: Crypto Firms Under Fire: US Lawmakers Accuse Them of Contributing To ‘Tax Gap’

The US Commodity Futures Trading Commission (CFTC) has already filed charges against FTX for allegedly operating an illegal exchange and maintaining a “sham” compliance program. 

Binance itself is also under investigation by the Department of Justice (DOJ) for potential money laundering and sanctions violations.

Featured image from Money Morning, chart from TradingView.com
Editorial Process for bitcoinist is centered on delivering thoroughly researched, accurate, and unbiased content. We uphold strict sourcing standards, and each page undergoes diligent review by our team of top technology experts and seasoned editors. This process ensures the integrity, relevance, and value of our content for our readers.
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Scott Matherson

Scott Matherson

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Scott Matherson is a leading crypto writer at Bitcoinist, who possesses a sharp analytical mind and a deep understanding of the digital currency landscape. Scott has earned a reputation for delivering thought-provoking and well-researched articles that resonate with both newcomers and seasoned crypto enthusiasts. Outside of his writing, Scott is passionate about promoting crypto literacy and often works to educate the public on the potential of blockchain.

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