A condensed list of the main information from the lawsuit is available in this article. The CFTC has made some difficult allegations against Binance, with the Chairman comparing the trading platform to a "fraudulent scheme.

Overall, the news had an impact on what was happening on the exchange. Specifically, over the next two days after the lawsuit was filed, Binance users withdrew the equivalent of $2.2 billion from the exchange, but at the same time they deposited $1.3 billion worth of coins there. Accordingly, users are not fleeing the exchange, although some are surely being cautious.

The exchange has also seen a decline in trading volumes with Bitcoin, with the amount dropping to its lowest in eight years. However, Kaiko analysts attribute the decline to the cancellation of zero commissions on certain BTC pairs, which had been in place on the exchange for several months.

Will Binance be sued for more?

According to The Block’s sources, the CFTC’s claims stretch to grave violations of the law by Binance. This is enough for the US Department of Justice for its part to get involved in the process as well. However, so far the spokespeople of this body have not yet expressed their own position on the suit.

The Securities and Exchange Commission (SEC) can also put pressure on the exchange – at least this opinion is held by Mark Fagel, former regional director of the San Francisco office of the Commission. Here’s his quote on the subject.

The SEC is expected to file a separate lawsuit, given how active they are in the crypto space. The parallel actions by the CFTC and SEC raise the thorny question of whether digital assets are commodities or securities, although, as with FTX, regulators can find their compromises.


As a reminder, the lawsuit filed by the CFTC recognizes Bitcoin, Etherium, Lightcoin, Binance USD and Tether USDT as commodities rather than securities.

That said, SEC head Gary Gensler has previously hinted repeatedly that altcoins are considered securities by his agency. With this wording, the SEC has, among other things, forced cryptocurrency exchange Kraken to suspend steaking services for US customers. In addition, the Commission suspended the issuance of BUSD Stablecoin by Paxos and sent a Wells notice to exchange Coinbase. This means the regulator is also going to sue the latter, as the notice signals the end of the ongoing investigation.


SEC officials have so far declined to comment on the potential lawsuit against Binance. The same question the previous day received a vague answer from CFTC Chairman Rostin Banham. It is worth assuming that regulators do not yet have a consensus on possible action against Binance.

During his testimony before a US House of Representatives subcommittee on Tuesday, Banam also made the following statement

This was a continuing violation of the law, so I clearly understood that we needed to act as quickly as possible to stop this violation and issue a permanent injunction.

The so-called permanent injunction – if granted in court or agreed as part of a settlement – would prohibit Binance and its CEO from continuing to facilitate BTC, LTC, BUSD and USDT trading in the US. In theory, this could offset the positive effect that the news of the agency’s recognition of the listed assets as commodities has provoked. However, it is important to understand that Binance operates in the US market through a separate company, Binance.US, which means that the giant’s global business is unlikely to be affected in any way.

???? MORE INTERESTING STUFF CAN BE FOUND ON US AT YANDEX.ZEN!

On the whole and regulators may well go all the way. So believes Rohan Gray, assistant professor of law at Willamette University. Here’s a relevant rejoinder.

If anyone can be “made an example of” after Sam Bankman-Friede, it is Changpen Zhao. The contempt with which he treated the US regulatory system, acting wherever it wasn’t, while still dominating his field in the US. It’s like pointing the middle finger in front of the FBI building and hoping you don’t get arrested.

We think the comparison between FTX founder Sam Bankman-Fried and Binance CEO Changpen Zhao is incorrect. Still, the former was very likely to use his own customers' funds for his own needs, while Changpen is actively promoting the cryptocurrency industry. In particular, Binance was the first to introduce mandatory identity verification for its users among major platforms, and the platform was also among the first to launch a transparent reserve verification system. In current situations, where banks are experiencing problems due to their partial provisioning, such a feature of cryptocurrency exchanges is an important advantage.


This does not seem to be about fighting against the system per se. Cryptocurrency regulation in the US needs serious reforms, as the current approach seems totally unpromising. And if regulators only hand out bans, America could be left far behind in terms of overall control of what happens in the crypto industry. And that will lead to talent outflow, underreporting, and other problems. Although, as you can understand from the current situation, the authorities are not particularly worried about such a scenario.


What do you think about it? Share your opinion in our crypto chat with former millionaires. And perhaps future ones, too.