Binance vs Regulators. Will the exchange be closed and BNB fall to $0
By Yuriy Bishko Updated December 21, 2022
- About Binance
- Why have US regulators launched an investigation against Binance?
- Is the BNB case similar to the XRP case?
- What solution should you expect for Binance?
Following the news of the launch of an investigation against Binance, even Bitcoin, which has a market capitalization of nearly $600 billion, fell 6%, showing how influential this cryptocurrency exchange has become in the crypto world.
Only a beginner hasn’t heard of the Binance cryptocurrency exchange. Binance is the top cryptocurrency exchange in terms of the number of unique users for the last 2-3 years. Founded in 2017, it has gained popularity due to the large number of altcoins available for trading – about 600. It is suitable for large players because of the quick ability to exchange their $50-100 million for crypto in a few minutes.
Why have US regulators launched an investigation against Binance?
The SEC (the most authoritative US securities regulator) has launched an investigation against Binance.
It is alleged that the Binance Exchange used its cryptocurrency to generate additional revenue in 2017 when selling its own Binance Coin (BNB) exchange coins. The US law requires the registration of such financial activity, which has not been done. Only the SEC can explain why this case was opened in only 5 years, but so far there have been no comments from the regulator.
Is the BNB case similar to the XRP case?
Yes, in fact the cases are identical. Ripple is also accused of raging financial sales of its own XRP coins. This case was opened in 2018, and in 2020 the first trial of the company's management took place. The case is ongoing, but there are no significant decisions on the charges or their rebuttals.
The coin itself is growing very sluggishly, and in the last bull market it grew even less than Bitcoin, which is 30 times larger than altcoin. This is due to the lack of inflow of money into the company, for fear of investors losing their own money if the court decides to imprison the management.
It should be added that XRP coins are completely centralized, i.e. most of them are stored in 20-30 wallets, which contradicts the principle of decentralization, which is the main in cryptocurrency. At one point, owners may decide to sell coins and bring down the price, thus leaving investors without money.
What solution should you expect for Binance?
This event, which is being investigated by the regulator, happened 5 years ago, and Binance has grown hundreds of times and completely changed:
1. large reserves have been created to save funds for traders and crypto investors who use the exchange.
2. an audit of all regulators in the United States has been completed, and the expansion of the world, which is now the focus of the EU and Asia, continues. Germany, France and Italy have issued official permits for the operation of the exchange in the country. Ukraine did this in 2020-2021.
3. new products have been added: Launchpad (a platform for choosing new cryptocurrencies, where the exchange community can vote for the best ones and then trade them after listing), support for NFT and platforms for trading them, staking, a platform where you can give your coins to the exchange in debt interest), etc.
4. significant international influence and a large community in the United States. The trap that the SEC falls into is the depreciation of the BNB coin, which could lead to negative sentiment among the crypto community. With the collapse of the price of this altcoin, which by the way is the 5th largest cryptocurrency and has a capitalization of $47 billion (!), a large number of investors, including from the United States, will lose their money. Can you imagine this fall?
Given all these factors, do not expect the coin price to fall to $0, although fluctuations are indeed possible. Reputational risks for the company are also not great, because, as mentioned earlier, a case that is more than 5 years is unlikely to affect the further development of the exchange.
Binance US is a subsidiary of Binance's parent company and officially pays taxes in the United States, and the exchange is likely to pay a small fine, and the market will respond to this decision only by growth.