What will be the consequences of the SEC proceedings with Binance?

The US Securities and Exchange Commission (SEC) filed a lawsuit against the world’s largest crypto exchange Binance and its head Changpeng Zhao, charging with violation of securities trading rules and a number of other claims. Against this background, the bitcoin rate at the moment sank to $25.44 thousand, and the massive sales of traders affected the prices of those crypto assets that the department mentions in the lawsuit, writes RBC Crypto.

The main US exchange regulator has classified a number of tokens as assets falling under its jurisdiction, that is, as unregistered securities. This status could make it difficult to trade tokens if exchanges avoid listing them for fear of drawing the attention of the SEC.

The lawsuit mentions BNB, which has a market capitalization of $44 billion, as well as coins Solana (SOL), Cardano (ADA), Polygon (MATIC), Filecoin (FIL), Cosmos (ATOM), Sandbox (SAND), Decentraland (MANA) , Algorand (ALGO), Axie Infinity (AXS) and COTI (COTI). The price of each of the coins after the publication of the news slipped by 8-13%.

If we add to this list XRP, the issue of the status of which has been sorted out for quite a long time as part of the litigation between Ripple and the SEC, as well as several other coins that the agency previously announced, it turns out that the agency can equate crypto assets with an aggregate value of unregistered securities. capitalization of more than $115 billion.

What are the consequences

Classifying cryptocurrencies and tokens as securities is one of the most serious risks of issuing cryptocurrencies in the United States. The requirements for the issue and circulation of securities there are quite strict and not all companies are able to comply with all the necessary procedures, explains Efim Kazantsev, an expert at the Moscow Digital School educational ecosystem.

This move by the SEC “well fits into the trend aimed at tightening the screws in the cryptosphere,” the expert argues. Even traditionally crypto-friendly jurisdictions are gradually moving towards more control and tightening regulation.

If the SEC claim is satisfied, according to Kazantsev, this will lead to an even greater drop in the value of tokens and cryptocurrencies. For some projects, this may even lead to the impossibility of continuing operations in the United States, because not all companies will be able to quickly reorganize and bring their processes in line with the requirements of the regulator.

In his opinion, the situation around Binance is able to have a long-term impact on the cryptocurrency market, as this may lead to a tightening of regulation and regulatory framework for crypto exchanges. This, in turn, will lead to a decrease in liquidity in the market and an increase in the cost of transactions. The outflow of funds from Binance could lead to a more serious drop in the price of cryptocurrencies.

According to estimates by various analytical services that monitor exchange wallet addresses, after the publication of the SEC lawsuit, users withdrew assets from their accounts in the amount of $ 700 million to $ 1.4 billion. The total amount of exchange reserves at the time of publication, according to Nansenexceeds $54 billion, and the balance in stablecoins is $8 billion.

Binance may try to cooperate with regulators and provide them with the necessary information to avoid serious consequences. However, if the exchange is threatened with a complete closure in the US, this will force the company to reconsider its strategy for the US market. “Let’s hope that the exchange will cooperate and it will be able to clear most of the charges in order to comply with the requirements of regulators in the future,” Antonov notes.

If regulators continue to investigate and possibly bring new charges against Binance, this could lead to even more negative consequences for the exchange and the crypto industry. The resolution of this conflict may take a significant amount of time and, most likely, will depend on what position Binance takes in this situation and what information Changpeng Zhao broadcasts to the crypto community. “If he is honest with the investors of the exchange, you should not expect an exodus from it. Now the work of lawyers and lawyers will begin, so we are waiting for the courts, ”explains the expert.

Market impact

According to the results of yesterday’s trading, the price of bitcoin decreased by 5.12%, to $25,728. The fall is small, so “not everything is so bad,” Antonov notes. Changpeng Zhao, according to him, “always was on the side of the investor”, so you should not worry about your funds, the analyst explains, adding that he does not yet see a reason to panic.

Now the attention of investors is riveted to the meeting of the US Federal Reserve. The economic calendar for this week is empty. A downward correction has begun in the dollar, so if buyers do not start to panic prematurely in the crypto market, then through consolidation, the bitcoin rate may again recover to $26,750. If the price recovers quickly (within 24 hours), growth may be the beginning of an upward movement, the analyst suggests.

According to Antonov, the situation with Binance underlines the importance of transparency and regulation in the cryptocurrency market. Requirements for market participants may become tougher, and this may affect the stability of the market as a whole. Therefore, investors should keep an eye on developments and take a prudent approach when making decisions.