Binance loses its U.S. CFTC lawsuit, crypto prices fall

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Binance loses its U.S. CFTC lawsuit, crypto prices fall

A U.S. federal watchdog took aim Monday at the biggest target in crypto. Investors don't seem to care about where they invest.

The value of crypto locked in the Binance blockchain has dropped 2.7%, while the token that powers that blockchain, BNB, has dropped 4.3% since news broke on Monday that the Commodity Futures Trading Commission has sued Binance, its founder and a former executive. The decline in crypto markets narrowed just a little more than a broader drop in crypto markets.

The absence of market reactions shows traders are betting that the CFTC's actions won't disrupt Binance's operations. The lawsuit against the largest exchange for crypto is the latest in a series of regulatory actions that have prompted speculation by U.S. lawmakers that U.S. regulators are conducting a coordinated effort against the cryptocurrency industry.

However, outflows from Binance's centralized exchange have also been muted. Users withdrew about $1.2B from the exchange on Monday. Although substantial, that figure has been topped on two separate occasions this month alone, a figure that is less than 2% of the exchange'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 denounced the charges. Binance's analysts are confident Binance will be able to survive the CFTC lawsuit.

Some attorneys have flagged allegations in the complaint that could become fodder for a criminal investigation led by the Department of Justice. Details in the suit allege that Binance's platform had been used by criminals and entities subject to U.S. sanctions.

The Commodity Futures Trading Commission filed a 74-page complaint alleging that the company was suing Zhao, three of the many firms that operate the Binance platform, and a former Binance executive. The CFTC is pursuing a permanent ban on Binance, permanently banning the company and its employees from trading commodities in the United States, and clawing back money Binance made from customers based in the United States.

The CFTC's chief counsel, Gretchen Lowe, said his 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.

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