THE CRYPTO CRISISFallout from FTX Layoffs, BankruptciesTimelineA Doomed EmpireSBF InterviewCaroline EllisonNishad SinghBitcoin's FutureNewsletter Signup Binance Sees $2 Billion in Outflows as Troubles Compound In a tumultuous few days, crypto giant raises fees, suffers software issues and faces regulator lawsuit Binance founder Changpeng Zhao said the CFTC complaint is ‘unexpected and disappointing.’PHOTO: HUGO AMARAL/ZUMA PRESS By Vicky Ge Huang and Dave MichaelsMarch 28, 2023 4:33 pm ET Traders are pulling billions of dollars from Binance as problems plaguing the world’s largest crypto exchange continue to mount. The Commodity Futures Trading Commission on Monday sued Binance, alleging the exchange operated illegally in the U.S. and violated rules designed to prevent illicit financial activity. Last week, Binance announced it would charge fees on spot bitcoin trading again after cutting them to zero last summer. It also had to temporarily suspend spot trading for hours while it fixed a software error. As of Monday evening, Binance had experienced net outflows of $2.1 billion on the Ethereum blockchain over seven days, according to crypto data provider Nansen. Overall, Binance holds $63.2 billion in the exchange’s publicly disclosed wallets, Nansen data shows. “The pace of withdrawals is heightened compared to normal activity and did pick up after the CFTC announcement,” Andrew Thurman, an analyst at Nansen said on Monday. NEWSLETTER SIGN-UP The Logistics Report Top news and in-depth analysis on the world of logistics, from supply chain to transport and technology. Subscribe Still, Binance has seen bigger outflows in the past from regulatory moves. Mr. Thurman said outflows were more pronounced in February after New York regulators announced their ban on the new issuance of Binance-branded stablecoin BUSD, passing $1 billion every 24 hours at its peak. The token, the world’s third-largest stablecoin, has seen its market value more than halve this year. Binance’s decision to bring back trading fees likely contributed to a decline in its spot market share, analysts say. The exchange’s spot market share dropped to a low of 30% on March 24 from 57% at the start of the month, according to CryptoCompare. The majority of trade volume on Binance was zero-fee, up until it added back the fees, according to Kaiko, a digital-assets data provider. “Fees are extremely important,” said John Quarnstrom, portfolio manager at crypto hedge fund Iceberg Capital. “Generally I’ll make a decision to trade on an exchange first and foremost on its custodial aspect; the second is the fees for sure.” Binance maintained its 66% market share for the crypto derivatives market as of March 24, according to CryptoCompare. A spokeswoman for Binance didn’t immediately respond to a request for comment. In another sign of trouble for the crypto giant, a federal judge on Tuesday blocked Binance.US, the American affiliate of Binance, from buying Voyager Digital’s customer accounts out of bankruptcy while federal authorities challenge the deal. Investors and analysts are monitoring for more regulatory actions against Binance in the coming months in the U.S. and potentially other jurisdictions. The firm’s chief strategy officer told The Wall Street Journal last month that Binance expects to pay monetary penalties to settle existing U.S. regulatory and law-enforcement investigations of its business. “The arm of the U.S. agencies is very long,” said Chris Perkins, president of crypto venture firm CoinFund and member of the CFTC’s Global Market’s Advisory Committee. Binance’s continuing efforts to evade U.S. rules and let Americans use its offshore crypto exchange was part of an “ongoing fraud,” CFTC Chairman Rostin Behnam said Tuesday. Speaking on CNBC, Mr. Behnam said Binance intentionally evaded the CFTC’s registration requirements by instructing clients on how to connect to the exchange without revealing their location in the U.S. Binance never registered with the CFTC, so it wasn’t legally authorized to offer crypto derivatives to American traders, the regulatory agency said. “This was an ongoing fraud dating back to 2019, an ongoing violation of the Commodity Exchange Act,” Mr. Behnam said on CNBC’s “Squawk Box” program. “This seemed to be a pretty clear case of evasion and something that we needed to step in aggressively with and do it as quickly as possible.” A CFTC spokesman said Mr. Behnam was “speaking generally to a more general audience about what the Binance case is, essentially fraudulent activity.” But the agency didn’t charge Binance or its executives with fraud as defined by the law that the CFTC enforces. Binance has said it has made efforts to operate legally in the U.S., including setting up an affiliate, Binance.US, that offers a slimmed-down menu of crypto products for American users. Binance founder Changpeng Zhao said the CFTC complaint is “unexpected and disappointing,” adding that Binance has been “working cooperatively with the CFTC for more than two years.” Some investors have pulled back from Binance, fearing the type of bank runs that felled crypto exchange FTX and other lending platforms last year. François Cluzeau, head of trading at crypto market-making firm Flowdesk, said the firm has reduced its exposure to Binance since Friday. “We always try to keep minimal funds on exchanges, but now we have reduced even more,” Mr. Cluzeau said. “We had a terrible year with FTX and nobody wants to take that risk again.” Write to Vicky Ge Huang at vicky.huang@wsj.com and Dave Michaels at dave.michaels@wsj.com
With all fraud in Credit Suisse imagine how much is going on in places like Binance that has no oversight.
it is known Binance heavily manipulates crypto prices. Add Tether on top of it, and one wonders what is the real value of BTC?
Gold is always manipulated... and silver squeezes are nothing new.... Now I wonder, what market isn't manipulated? I would be tempted to say the BOND market, but even the Fed manipulates that too!
A $1 billion lawsuit is making matters worse for Binance https://www.yahoo.com/lifestyle/1-billion-lawsuit-making-matters-123100114.html
No ‘immediate path forward’: CFTC is talking to Binance after launching legal action, official says https://www.cnbc.com/2023/04/25/cftc-commissioner-hopes-to-find-path-forward-in-binance-lawsuit.html Kristin N. Johnson, commissioner at the CFTC, said the regulator has been in conversations with Binance to address its concerns about the company’s conduct. She said the regulator hopes to find a path forward in the legal battle with crypto exchange Binance — however, at this stage, there is no “immediate path forward.” The CFTC sued Binance last month alleging the platform solicited users in the U.S. through its platform and allowed them to trade derivatives despite not being authorized to do so. A Commodity Futures Trading Commission official said Tuesday that she hopes to find a “path forward” in the regulator’s legal battle with crypto exchange Binance, noting that no decision has been taken yet on whether to settle the case or take it to court. Kristin N. Johnson, commissioner at the CFTC, said that the regulator has been in conversations with Binance to address its concerns about the company’s conduct. The CFTC sued Binance, its CEO Changpeng Zhao and its former chief compliance officer last month, alleging the platform solicited users in the U.S. through its platform and allowed them to trade derivatives despite not being authorized to do so. Binance said it would stop operating in the U.S. in 2019. “I want to be really careful not to prejudge what will actually happen in the litigation. And I want to say that typically, in the context of any litigation, we are always ready to have conversations and typically even ahead of the litigation,” Johnson said in an interview with CNBC’s Arjun Kharpal Tuesday. “We’ve been in continuing conversations with the business to describe what we understand is potentially problematic conduct and to give them an opportunity to explain that conduct and to help us find a path forward.” “As of the moment, we can conclude that there is not an immediate path forward,” she added. “That doesn’t mean there couldn’t be one and hopefully there will be one.” Her comments mark a rare statement on the Binance suit to media since the CFTC first announced it was suing the company on Mar. 27. Binance was not immediately available when contacted by CNBC. In a blog post following the complaint’s filing, Zhao disagreed with the CFTC’s findings and said the exchange was “committed to transparency and cooperation with regulators and law enforcement” in the U.S. and globally. The Binance group, unlike its U.S. affiliate Binance.US, isn’t regulated in the U.S. The company has frequently faced criticism for operating in various jurisdictions — including the U.K., Italy and Singapore — without approval. Crypto companies have faced tougher scrutiny in the U.S. lately in the wake of the $32 billion flameout of crypto exchange FTX and a slew of other industry collapses and a plunge in prices which caused hefty losses for investors. On Monday, Coinbase filed suit against the U.S. Securities and Exchange Commission — making good on a vow made by CEO Brian Armstrong last week to take the regulator to court. Coinbase suggested the regulator should be forced to clarify whether it would allow the crypto industry to be regulated under existing securities laws. Johnson said she hopes that Congress will step in to introduce crypto-specific rules soon. The crypto industry is still largely unregulated, however calls for it to be brought within the regulatory fold have grown following recent blowups in the space like the implosion of crypto exchange FTX and stablecoin firm Terra. “I do think that we’ll have to be really careful to have dynamic regulation that is not just responsive to the asset classes that we see in the market today but that gives us the flexibility and capability to respond as entrepreneurs and innovators, coders and developers of software protocols continue to release more and more interesting asset classes and products and financial markets,” she said. “Under immediately existing laws, there is provision to understand how securities laws would apply to any digital assets that qualify as securities. And those the same in the context of commodities,” Johnson said. “However,” she added, “it is imperative that Congress step up and make plain what their preference is in terms of how to deal with the spot market oversight. I think that’s the singular space, if we went very narrow, specifically to your uncertainty point, that spot market oversight, that definitional piece is very critical. And I think it’s helpful for us if Congress assist us and giving us that guidance.”