Binance she was denounced in the US with very sensitive charges; the effects on cryptocurrencies were not long in coming.
Crypto investments continue to be highly volatile operations and, therefore, high risk. It’s not something new but something that from time to time reminds us of the events in this type of market or something related to them.
This Monday there was one more episode when the cryptocurrency exchange giant, Binance, was sued by the US financial authority, it is no small thing and it may be the beginning of the end for this player in the most volatile and risky market on the planet.
Lawsuit against Binance and its CEO
This Monday the United States Securities and Exchange Commission (SEC)) brought 13 charges against Binance, the world’s largest cryptocurrency exchange; he also sued his CEO, Changpeng Zhao (CZ).
The SEC accuses the company and its CEO of crimes such as mixing customer funds, diverting them to accounts under the control of Changpeng Zhao (CZ), falsifying business figures and lying about internal security mechanisms, among others.
According to the SEC, Zhao and his company concocted an extensive web of deception, conflicts of interest, lack of transparency, and willful circumvention of the law.
According to the SEC, in its document released this Monday, Despite the fact that the platform was prohibited from operating in the United States, both the company and the CEO broke their own rules to allow transactions to customers who were most profitable for the business.
As if that weren’t enough, the company’s national division, Binance US, was fully in the hands of Zhao, even though he lied that it was an independent entity.
But the SEC makes an even more serious accusation by including a lawsuit for the crime of mixing client funds and diverting them at the will of the firm or CZ, something highly punishable by US law.
According to the SEC, part of the users’ money has been illegally sent to Sigma Chain, a company owned by the founder of the platform. There are also accusations about the figures and volumes that the company handled.
Billions of dollars at stake
The accusation is very serious; in fact, the cryptocurrency market rocked yesterday as the company is one of the largest in the market and manages a significant risk portfolio.
According to the SEC, Binance has $62.5 billion in its crypto asset portfolios, an amount sufficient to generate a collapse and something more if the money was mismanaged, as apparently was the case since the SEC accuses the company and owner of irregularly transferring funds within it and also to others, including one identified as Merit Peak, controlled by the same owner.
Lying to customers about their own internal controls, allegedly unreliable and opaque, is another alleged crime. Binance was not registered in the United States nor did it have a license to provide cryptocurrency services, to which the SEC has already taken action.
Blow to confidence in crypto assets
The lawsuit filed by the SEC is at its heart a new and severe blow to confidence in crypto assets, specifically for cryptocurrencies. The foregoing, after the fall of FTX, a collapse that also occurred in the middle of the process of raising interest rates in the United States, generating more mistrust and magnifying the collapse.
The consequences of the legal process against Binance were not long in coming, the price of Bitcoin broke $26,000, while the price of ether fell to less than $1,800, the two main crypto assets. At least so far the market capitalization is holding on to over a trillion dollars, but it’s a serious hit.
Volatility, the name of the game
As we know, the world of cryptocurrencies is highly risky, and anyone from all over the world can invest in this market.
In the case of the Mexican market, there are no official figures that reflect what and how much is the risk exposure of investors living in our country.
What should be clear to us when we decide to invest in this market, is that the name of the game is defined with a single word: volatility.
The SEC’s lawsuit against Binance, in the United States, is simply a warning that regulatory authorities in general have a long way to go to protect client resources, in a market that is universal, with many more aspects, highly liquid before through technological processes, and always very risky by operational essence.
Binance is a global platform, it is also in Spanish and Mexican investors have access to this type of operations. However, unlike in the United States, here the regulatory authority does not seem to be investigating the operation of the platform, much less. Mexican investors will have to look out for themselvesSo don’t forget what the name of the game is: Volatility and high risk.
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