- DOJ launched investigation into Binance due to suspicions around its Russian arm.
- Ex SEC officer suggested that regulatory scrutiny was imminent.
Binance[BNB] has encountered significant hurdles in the last months. The centralized exchange came under the scrutiny of multiple regulatory authorities recently, which seriously affected both the exchange’s operational status and the performance of its associated token.
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However, Binance’s regulatory woes were far from over.
Is Binance playing Russian roulette?
Following last year’s US sanctions on Russia in the wake of Ukraine’s invasion, Binance reduced its operations in the country. Nevertheless, data compiled externally indicated that Binance remained actively involved in managing significant trading volumes denominated in Russian Ruble.
A recent report from The Wall Street Journal highlighted that Binance’s clients can convert funds from sanctioned banks into balances at Binance. These events occur through intermediary layers on the exchange.
Furthermore, Binance enables peer-to-peer exchanges of rubles for digital tokens, frequently involving banks flagged on Western blacklists. According to the WSJ report, these actions are supported by evidence from company websites, user screenshots, and messages within official chat groups.
The Journal added that Binance managed $8 billion in ruble-to-crypto trades in July, predominantly involving tether. The report also indicated that Binance Angels, known volunteers of Binance, informed individuals on Telegram that the exchange does not impose trading limitations on Russian clients.
Nevertheless, the report contradicts Binance’s public declaration regarding its activities within Russia. Last year, Binance implemented strict measures due to European Union sanctions. This affected Russians with assets surpassing €10,000 on its platform.
Ex SEC official chimes in
Ex-SEC enforcement official John Reed Stark has persistently voiced his speculation for months that a US Department of Justice (DOJ) action against Binance is imminent or has already been filed under seal. While these assertions haven’t yet materialized, Stark has taken to X to state his argument.
Stark included the recent WSJ report in his thread. However, he also stated other instances that directed the fact that Binance’s regulatory problems were here to stay.
He mentioned a comprehensive 136-page SEC complaint which suggested that a market manipulation scheme at Binance was in the works. The complaint alleged that specific entities controlled by Binance and CZ could have mixed billions in customer funds, putting investor assets at unwarranted risk.
Yet Another Reason Why US DOJ Will File, Or Has Already Filed Under Seal, a Binance-Related Criminal Indictment
The WSJ reports that via layers of intermediaries, Binance’s clients can turn funds at sanctioned banks into balances at Binance, while Binance also enables… pic.twitter.com/xdd6HGdpEI
— John Reed Stark (@JohnReedStark) August 23, 2023
A distinct 76-page complaint from the U.S. Commodity Futures Trading Commission depicts a scenario of a “vast criminal enterprise at Binance,” underscoring its potential disregard for crucial anti-money laundering protocols.
He proceeded to express that “In my opinion, a U.S. Department of Justice (U.S. DOJ) indictment related to Binance has either been filed under seal already — or is on the verge of being filed.”
Are regulatory bodies holding back?
While John Stark’s previous predictions haven’t materialized, a recent report from Semafor has intensified apprehensions. The report suggested that the U.S. Department of Justice (DOJ) was actively evaluating the possibility of bringing fraud charges against Binance, carefully assessing the potential repercussions such legal action might have on the broader cryptocurrency landscape.
Inside sources have alluded to concerns reminiscent of a “bank run,” drawing parallels to the scenario observed with the now-bankrupt FTX platform.
This scenario could precipitate overwhelming withdrawal requests, jeopardizing consumer funds and potentially shaking the Bitcoin and crypto markets at large. In an attempt to avert such a scenario, alternative legal avenues, including levying fines or deferred/non-prosecution agreements, are being supposedly deliberated.
Furthermore, the ongoing regulatory challenges and legal uncertainties surrounding the exchange have led to increased scrutiny from both institutional and retail investors. The reports of potential fraud charges and the comparison to past market incidents have fostered an atmosphere of caution. This situation not only affects Binance but also has broader implications for the cryptocurrency market as a whole.
Realistic or not, here’s BNB’s market cap in BTC’s terms
In the midst of all this, many major executives have exited the exchange. While Binance and a number of these executives assert their departure resulted from other factors, a prevailing belief exists that their exits were prompted by legal challenges.
How is BNB doing?
At press time, BNB was trading at $206.39. The sentiment around the BNB token fell significantly in the last few weeks. This implied that there was a negative outlook towards the BNB token on the social front.
Source: Santiment