SEC Lawsuit Against Binance Sends Shockwaves Through Crypto Industry, Impacting Coinbase and Bitcoin.
SEC's legal proceedings against Binance and CEO CZ on June 5 had a ripple effect on Coinbase. Shares dropped over 20%, with Bitcoin falling 5% below $26k. The intensified scrutiny by SEC on crypto players continues, impacting market dynamics and raising regulatory concerns within the cryptocurrency industry.
This announcement had the same effect as a ricochet while spreading throughout the sector. As a result, shares of crypto exchange Coinbase immediately fell even though Binance was the subject of these lawsuits before Coinbase was also the target.
The effects of the SEC lawsuit on the crypto sector in general
US regulators continue their efforts to regulate the cryptocurrency industry. With this in mind, during the day yesterday, the SEC filed a lawsuit against Binance.US, its American dedicated platform and its CEO Changpeng Zhao (CZ) in the Court of the District of Columbia.
Shortly after the statement released by the regulator, Coinbase shares fell drastically, taking a slap of more than 20% temporarily from $65 to $45. For now, the action has started a slight rise again, but despite everything, the drop is severe since it represents a loss of 13%, with the current price of the COIN share standing at $51.22.
However, Coinbase is not alone in feeling the full impact of the SEC. Just as its shares were falling, the price of Bitcoin (BTC) also fell more than 5%, dropping below $26,000.
MicroStrategy (MSTR), the company among the world's largest Bitcoin token-holders, saw its shares fall nearly 9%. At the same time, the shares of several Bitcoin mining companies have also felt the jolts of this seismic wave, with Binance as its epicenter facing the SEC.
The SEC intensifies its attacks on players in the crypto world
The origin of this imbalance is simple: SEC officials are accusing Binance, the world's largest cryptocurrency exchange, and its affiliates of deception, fraud, and embezzlement. According to the regulator, the platform misled its customers. It diverted funds to a separate investment fund owned by the company's CEO, Changpeng "CZ" Zhao.
The set of charges made by the SEC is very similar to complaints filed on March 27 by the Commodity Futures Trading Commission (CFTC), another US regulator.
CZ denied all the charges outright through a blog post published on his platform's website.
However, if the current case is unrelated to Coinbase, the latter already has disputes with the SEC. The regulator organized an investigation into the company's digital asset listings, staking-as-a-service program, institutional trading service and wallet services.
The company, in turn, sued the SEC in hopes of forcing the regulatory agency to set clearer rules regarding its system for regulating digital assets. The Sec on June 6 also attacked Coinbase again, as did Binance, with numerous lawsuits.