SEC and CTFC against Binance. In today’s ultra-mediatized society, where 24-hour news channels compete scoops When it comes to social networking, one news item often chases another. Business circles, particularly the crypto, are no exception to this phenomenon, and in court cases, the time lag between the justice and the media is gigantic. While one case has yet to be officially judged, thepublic opinion already forms an idea by reading the media, then quickly moves on. But in the meantime, the proceedings are moving forward, the courts are at work and the law is trying to find its place amidst leaks and anonymous statements from sources close to the case, as the saying goes. Today, it’s Binance to answer charges from wash trading from Wall Street Journal while the platform is already at odds with US regulators. Details to follow.
Did Binance inflate its trading volumes? SEC suspects
It all started, once again, with an internal document to which the Wall Street Journal would have had access. Never stingy with a good scoop on BinanceThis media report alleges that employees of the American side of the exchange exchanged letters concerning unorthodox transactions. The report states that Sigma Chaina Swiss-based trading company owned by Changpeng Zhao, allegedly carried out a large number of trading purchases/sales in order to inflate volumes on the platform « using dozens of user accounts ».
The daily newspaper New York’s economic daily newspaper cites a university study to reinforce its point. 70% of exchanges on crypto exchanges are fake and fall under the wash tradingi.e. artificial volume inflation. The problem? This practice is, of course, completely illegal in traditional finance, but a legal vacuum exists in the crypto sector due to a lack of regulation.
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70,000 bitcoins change hands in the wee hours of the morning…
So, is everything that’s not illegal necessarily legal? Not for sure, and the American regulator intends to shed light on these events. And in particular on these 70,000 bitcoins which would have changed hands one fine morning in 2019 and about which CZ would have said: « that’s us, I guess ». In any case, the Binance reacted to this article by denying all the accusations, as usual:
« We firmly believe that the SEC’s allegations regarding the wash trading are totally unfounded and based on a fundamental misunderstanding of the facts and a misinterpretation of the law in force. »
At the same time, it’s from the CFTC other information concerning Binance and its charismatic CEO. The other US financial regulator has taken legal action against the exchange, but it seems that the latter is on the verge of a settlement. counterattack according to a court filing published on July 24. Binance is asking for the complaint to be dismissed and for the page limit of their memorandum to be extended, as can be read in the document.
It’s now the justice which holds the cards and will have to take a stand on all the charges hanging over the world’s largest crypto platform. For the CFTCBinance violated the rules on derivatives and unregistered trading activities in the United States. According to the SECwould be a violation of the securities laws. As far as CZ and his team are concerned, the answer is relentlessly the same: it’s all just FUD, and the work goes one. To be continued!
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