An indictment against Binance in the US, according to officials, might result in a run on the exchange, similar to what happened to cryptocurrency exchange FTX in November 2022.
According to reports, the US Department of Justice is thinking about filing fraud charges against cryptocurrency exchange Binance, but is holding off out of concern for possible consumer harm. An indictment against Binance might result in a run on the exchange, similar to what happened with FTX in November 2022, according to persons with knowledge of the situation who spoke with Semafor on August 2. So as to lessen any harm to consumers, the DOJ is looking into measures including fines or non-prosecution agreements.
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Binance is already the subject of criminal investigation in the US for allegedly breaking the nation’s sanctions against Russia. The U.S. Securities and Exchange Commission filed a complaint against the cryptocurrency exchange in June for alleged illegal practices and unregistered securities offerings. The exchange has also been the subject of legal action.
Related: Binance CEO, CZ to Seek Dismissal of CFTC Complaint
In March, the exchange and its CEO, Changpeng Zhao (CZ), were also under investigation by the Commodity Futures Trading Commission (CFTC) for allegedly breaking trading and derivatives laws. As other industry executives have also been accused of fraud for conduct at their separate companies, it is unclear how criminal accusations against Binance or CZ in the US would affect the cryptocurrency market.
Market Reaction to Reports
No charges had been brought against Binance or its U.S. counterpart, Binance.US, as of the report’s release. However, the market was immediately impacted by the announcement, with Binance Coin (BNB) falling by almost 2.5% and settling at $240.42. Similar to this, within an hour of the report’s release, the price of Bitcoin fell from $29,331 to $28,903.
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Despite the ambiguity, Binance recently announced the opening of Binance Japan. Meanwhile, rumors have been circulating that the exchange considered closing Binance.US in order to protect its operations because it did a significant amount of cryptocurrency-related business in China. These rumors have been refuted by Binance, which has made no more comments. The cryptocurrency community and investors are anticipating new developments in this developing issue.
Related: Binance begins launching trading services for Japan residents