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Wednesday, January 25, 2023

US Authorities serious allegation on Binance for Insider trading

The crypto market starts the new week with a correction. At the same time, new allegations against Binance are loud.

At the start of the week, the crypto market switches to correction mode. With a few exceptions, almost all coins suffer losses in the double-digit percentage range. The loss margin among the ten most valuable cryptocurrencies by market capitalization is between four and eleven percent. Solana does the worst here. Just a week ago, the Ethereum competitor celebrated a new all-time high at around $ 214. Since then, however, the SOL course has only tended in a southerly direction. At the time of going to press, Solana is trading at $ 144.59, down 13.87 percent.

In addition, there are new reports about Binance . As Bloomberg claims to have learned from anonymous sources, several American authorities, including the Commodity Futures Trading Commission (CFTC), are said to have initiated investigations against the world’s largest crypto exchange. The allegations are of insider trading and market manipulation. The authorities are investigating to what extent Binance or individual employees could have achieved advantages for themselves or the company by taking advantage of customer orders. To this end, the CFTC recently looked for witnesses and initiated an interrogation. However, the authority was not prepared to comment.

Binance rejects the allegations. In a statement to Bloomberg, a company spokesman emphasized the “zero tolerance policy” towards insider trading and at the same time referred to a “very strict ethical code” that Binance has towards its customers and the crypto industry. The trading platform has long since introduced strict guidelines in this regard, which would also result in criminal penalties in the event of violations.

At the same time, there are further investigations against Binance in the USA. Both the Internal Revenue Service (IRS) and the US Department of Justice are currently examining possible money laundering activities on the crypto exchange.

Binance has been under regulatory pressure for some time

For Binance, the expansion of the investigation comes at a time when the exchange is already under massive observation by international supervisory authorities. As a reminder, at the end of June , several authorities warned citizens about derivatives trading on Binance. The platform did not have any permission for such activities, it was said at the time. As a result, several payment partners ended their cooperation with the crypto marketplace.

Binance itself has since done quite a bit to address regulatory concerns. At the end of August, for example, an extensive KYC process was introduced that every user has to go through. In addition, the withdrawal limit for non-verified users was reduced from 2 to 0.6 BTC. Measures which at least were able to appease the British authorities to some extent, although a resumption of trading activities failed to materialize.

One of the main reasons for the continuing skepticism towards Binance is probably due to the fact that the crypto exchange still does not have a clear headquarters. For example, Malta, the Cayman Islands and the Seychelles are considered possible business locations, but this information has not yet been verified. One now wants to change that. As CEO Changpeng Zhao (aka “CZ”) said in an interview with the South China Morning Post , the company wants to become “more centralized” in order to be able to work better with regulators. As a first step, the aim is therefore to set up a main directorate. However, when and, above all, where this new location is to be built, CZ left it open.

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