Bitcoin price falls as Binance faces US ban
Bitcoin (BTC-USD) fell below the $27,000 mark after news emerged that Binance, the world’s largest cryptocurrency exchange, is facing a US ban.
Binance is being sued by the Commodity Future Trading Commission (CFTC), which could also lead to a possible trading and registration ban in the US.
Bitcoin fell 3.4% following the CTFC announcement, which said: “The Commodity Futures Trading Commission announced today that it has filed a civil enforcement action in the US District Court for the Northern District of Illinois, charging Changpeng Zhao and three entities that operate Binance- the platform with numerous violations of the Commodity Exchange Act and CFTC regulations.”
Changpeng “CZ” Zhao is the CEO of Binance, and the CFTC has accused him of encouraging Americans to “evade compliance checks” and violate US law.
The Binance cryptocurrency exchange has also been accused of not properly registering with the CFTC.
The impact of the CTFC investigation into Binance has added to an already cautious investor sentiment pervading the crypto markets, as traders await the outcome of the SEC’s notice to Coinbase (COIN).
Bitcoin was down 3.4% at $26,935 on Monday.
Ethereum (ETH-USD) fell 3% to $1,712.
The CTFC announcement also included a statement from CFTC Chairman Rostin Behnam, who said: “Today’s enforcement action demonstrates that there is no position, or alleged lack of position, that will prevent the CFTC from protecting U.S. investors.
“I have been clear that the CFTC will continue to use all of its authority to find and stop misconduct in the volatile and risky digital asset market.
“For years, Binance knew they were violating CFTC rules, and actively worked to both keep the money flowing and avoid compliance.
“This should serve as a warning to everyone in the digital asset world that the CFTC will not tolerate willful avoidance of US law. I applaud the diligent and dedicated work of the CFTC’s enforcement team in bringing this action, and for their hard work in handling illegal operations in the digital asset space.”
Following the news, the global cryptocurrency market capitalization was $1.17tn, down 2.8%, according to Coingecko data.
Coinbase Receives SEC Wells Notice
Last Wednesday, the US Securities and Exchange Commission (SEC) issued Coinbase Global Inc with a Wells Notice – a formal statement that the regulator intends to recommend an enforcement action.
Shares of Coinbase ( COIN ) fell nearly 13% to $67.83.
If the SEC officially classifies cryptocurrencies as securities, it will affect trading volume on cryptocurrency exchanges such as Coinbase by trading volume.
Read more: Crypto live prices
All cryptocurrencies, except bitcoin, must register with the SEC and be forced to adopt technology systems to make their order books compliant with the audit.
They will also face strict order execution rules to prevent market manipulation.
Exchanges such as Coinbase could face large fines from the SEC for listing cryptocurrencies that the regulator would consider unregistered securities.
SEC Chairman Gary Gensler said he considers all cryptocurrency values except bitcoin.
Crypto market reaction to interest rate hike in the US Federal Reserve
The cryptocurrency market remained mostly in the green after the Federal Reserve decided against a less hawkish rate hike at last Wednesday’s Federal Open Market Committee (FOMC) meeting.
The Fed’s 0.25% increase takes the benchmark federal funds rate to a target range of between 4.75% – 5%.
“The committee will closely monitor incoming information and consider the implications for monetary policy,” the FOMC’s post-meeting statement said.
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“The Committee expects that some additional tightening may be appropriate to achieve a monetary policy that is sufficiently restrictive to return inflation to 2% over time.”
Federal Reserve Chairman Jerome Powell said: “The process of getting inflation back to 2% has a long way to go and is likely to be bumpy.”
Cryptocurrencies have historically responded positively to lower interest rate environments, which can encourage more liquidity in global markets.
See: Web3: Venture capital still flows into crypto, claims head of Outlier Ventures | Crypto Mile
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