Binance finds itself entangled in a lawsuit filed by the US Securities and Exchange Commission (SEC), dealing a heavy blow to BNB, the token issued by Binance. The allegations leveled against the crypto exchange suggest its involvement in unlawful activities, specifically multiple violations of securities laws.
Consequently, the impact of these allegations manifested as substantial outflows from the exchange, prompting Changpeng Zhao, the CEO, to disclose an astonishing figure of over $392 million in net outflows in the last 24 hours. It’s worth noting that Binance has dealt with significant outflows before, indicating a history of navigating such challenges.
According to our data, last 24hrs, @Binance net outflow is about $392m.
Our wallet addresses are public. Some 3rd party analytics measure Change in AUM (asset under management) in USD equivalent as outflow. This would include crypto price drops (which decrease AUM) as “outflow”.…
— CZ 🔶 Binance (@cz_binance) June 10, 2023
Meanwhile, in the wake of the SEC filing, Nansen data indicates that Binance witnessed a staggering amount of nearly $3 billion in outflows. The aftermath of the recent lawsuit has caused BNB to plummet in value. Coingecko reports that the token has experienced a drastic decline of over 23% in just the span of a week.
Binance Vs. The SEC: What’s The Gist?
According to the official SEC press release, the company and 13 other entities are being sued for the operation of an unregistered exchange and the commingling of customer funds through companies related to Binance.
The regulatory body also alleges that Binance had knowledge of the regulations regarding exchanges and securities but chose to ignore those laws, putting investor funds at risk just to maximize profits.
They also highlighted the sale of unregistered securities. The SEC targets the company’s “Simple Earn” and “BNB Vault” crypto-lending products. These products are part of Binance’s staking service and, with the recent crackdown on staking services by the SEC, are considered securities by the regulatory body.
BNB market cap currently at $36.6 billion on the weekend chart: TradingView.com
The SEC also targeted Binance’s failure to restrict the exchange’s services to US citizens. Just this March, the Commodity Futures Trading Commission (CFTC) alleged that the company is breaking various financial laws including the ones intended to stop money laundering. The SEC also remarked that Binance misled customers through “strategic and targeted wash trading”.
BNB Yet To Make A Comeback
Since then, BNB is the only altcoin that has not rebounded since the general market downturn. However, analysts are still somewhat bullish in the short-term capacity of the coin despite the market’s recent slippage.
Source - Coingecko
At the token’s current price point of $235, BNB bulls should defend the $234 support level to target higher highs in the short term as long as no bearish news hits the market. But at the moment, it seems that the weight of the bears will defeat any attempt for a bullish breakout.
However, if the bulls are able to defend this support level, a return to the $300 price point might be possible. Despite the optimism in the market, developments in the lawsuit will surely affect BNB in the long term.
Featured image from Protos