Crypto-linked Binance suffers setback in U.S. lawsuit

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Crypto-linked Binance suffers setback in U.S. lawsuit

A U.S. government agency took aim yesterday on the biggest target in crypto. Investors don't seem to care about what they're doing.

The value of crypto locked in the Binance-constructed BNB blockchain has dropped 2.7%, while BNB, the token that powers that blockchain, has fallen 4.3% since news broke on Monday that the Commodity Futures Trading Commission had sued Binance, its founder and a former executive. The declines were just barely outpacing a broader drop in crypto markets.

The lack of market reaction shows traders are betting the CFTC's actions won't disrupt Binance's operations. The lawsuit alleges that U.S. regulators are taking steps to end the cryptocurrency industry, despite the fact that the nation's largest exchange is akin to the cryptocurrency industry.

However, outflows from Binance's centralized exchange have been muted. Users withdrew about $1.2B from the exchange on Monday. While substantial, this figure has been topped on two separate occasions this month alone, and is less than 2% of the stock's holdings, per Defi Llama.

Binance has made little effort to screen customers during their account sign-up process, allowing criminals and Americans to trade on its platform, according to the CFTC lawsuit.

In a statement, Zhao denied charges and said that he did not want the charges to be dropped. Binance is confident that it will survive the CFTC lawsuit.

Some lawyers flagged allegations in the case that could become fodder for a criminal investigation led by the Department of Justice. Details in the lawsuit suggest Binance believed its platform was used by criminals and entities subject to U.S. sanctions.

The Commodity Futures Trading Commission said in a 74-page complaint that Zhao, three of the myriad companies that operate the Binance platform, and a former Binance executive. The CFTC is seeking to sanction Binance, permanently banning the company and its employees from trading commodities in the US, and clawing back Binance's money from customers based in the United States.

own emails and chats reflect that Binance's compliance efforts have been a sham and Binance deliberately chose - over and over - to place profits over following the law, said Gretchen Lowe, the CFTC's chief counsel.

Shapiro, a prominent crypto lawyer, called the proposed penalties aggressive and potentially destructive, but acknowledged there was no guarantee a court would grant those penalties if Binance were found guilty.