Yesterday brought an intriguing development in the cryptocurrency market as Commodity Futures Trading Commission (CFTC) charged Changpeng Zhao (Binance’s CEO), Samuel Lim, and three other legal entities operating collectively as Binance with numerous violations of the Commodity Exchange Act (CEA) and other CFTC regulations. In the release document, the agency states that it seeks “disgorgement, civil monetary penalties, permanent trading and registration bans, and a permanent injunction against further violations of the CEA and CFTC regulations,” which paints a stark contrast to a tone used in previous cases against cryptocurrency exchanges.
According to the complaint, Binance’s CEO urged employees to circumvent compliance controls to maximize profits. The document alleges that for the relevant period since 2019, the exchange did not require its customers to provide any identity-verifying information before trading on the platform, failing to comply with anti-laundering, anti-manipulation, and anti-terrorist laws. Furthermore, the document alleges that the exchange’s management prompted its employees to use a message-deleting application (supposedly Signal) in order to destroy evidence about the malicious conduct. The complaint states that the defendants “conducted certain activities outside the U.S. designed to avoid CFTC regulation, such as intentionally structuring their entities and transactions to avoid registration requirements and instructing U.S. customers as well as other customers as to how to evade Binance’s compliance controls.”
As if it was not enough, the document also notes that Changpeng Zhao traded on the exchange's platform through approximately 300 accounts linked to him directly or indirectly (accounts owned by Merit Peak and Sigma Chain are also mentioned in the document), failing to disclose this fact to customers while also not subjecting mentioned accounts to any anti-fraud or anti-manipulation surveillance or controls.
These are just some of the highlights from the 74-page-long complaint that asserts Binance’s management was aware of the United States regulatory requirements but ignored them. As such, the lawsuit against Binance, combined with the ambitious goals of the CFTC (to impose a permanent trading ban on the exchange), may spill colossal trouble for the cryptocurrency market. Due to that, we raise a word of caution to investors; if you are naive and trusting, dismissing all of the developments as “FUD,” then you better be ready for a harsh lesson. Nevertheless, our outlook stays bearish, and we expect Bitcoin to retest its 2022 lows in the coming months.
Illustration 1.01 . The picture above shows the daily chart of BTCUSD. The red arrow shows declining volume, which we described as a questionable development (as for the rally's sustainability). We would like to see an uptick in volume accompanying the price drop to bolster a bearish case in the short term. The weakness in the stock market (especially the highly correlated tech sector) will also bolster this thesis (as we previously noted that a rebound in stocks would provide a temporary lifeline for cryptocurrencies).
Technical analysis Daily time frame = Neutral Weekly time frame = Bullish (weak trend)
Please feel free to express your ideas and thoughts in the comment section.
DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.
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As a fallout of this whole situation, a federal judge temporarily stopped bankrupt Voyager Digital from completing a proposed $1.3 billion sale to Binance.
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Media outlets report that Binance hid its extensive links to China for several years, setting a tone for an even harsher response from the regulator if these allegations are true.
@TradingView, Thank you very much for your support. I am sending love and big thanks to the team.
FieryTrading
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Good content. I also have a bearish short-term lean.
Tradersweekly
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@FieryTrading, Thank you for the coins and for sharing the chart.
cryptospawn
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The IRS here in the US says: "For years now we have had no idea on how to tax crypto, what the hell kind of asset it is or how to even report it, and we have no guidelines for traders on any of this, nor do we care either. But we expect everyone to report their gains somehow or face the consequences". 🤬seriously?!?!?! The SEC and CFTC do the same kind of shit too. "We have no idea what crypto is and we don't care. The point is we want to control this pie, period. And any one opposing this will pay grave consequences". These agencies are all guiltier than both Bernie Maddoff and SBF combined and yet they get away with their BS daily. Defund these CORRRRUPT organizations once and for all. But in the meantime yes it seems we have a black swan event in the making with this Binance thing. But remember, Binance stopped offering services to the US when they opened up shop under Binance US on Sep 24 2019, where they do comply with regulations. So, if the complaint points out that Binance has been breaking the law since 2019, it's prob unfounded since that's the year they stopped serving the US. CZ was smart enough to see where this would all end up years ahead of time. I can hear the "Insecurities and Exchange Commision now... "I don't care if they're complying, I want them fined and banned worldwide so it will be easier to gain control of this crypto thing! Make up some cheap 🐂💩 excuse and Shut them down now!"
Tradersweekly
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@cryptospawn, I agree; the U.S. regulator has been incompetent to provide more clarity on the issue for all these years.
HorseyTim
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Journalists control the narrative. News is always fake
Dutchy
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jealous banks.. aren't they doing exactly the same??
CryptoZox
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@Dutchy they doing evil things unfortunately. They are jealous because they fckn dollar is broken. FED and the evil banksters...
Dutchy
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@honlapozo AND jealous because crypto isn't uncontrolable DEBT!! They are in shit and know it. Fiat is based on trust nowadays instead of value!