Bitcoin fell to its lowest level since March after the SEC announced it is suing Binance and its CEO for breaking securities law.
Bitcoin was down more than 6% on Monday, with the losses deepening as the day dragged on. As of Monday afternoon, the flagship cryptocurrency had fallen to about $25,500 — the lowest it has been in months. Bitcoin has declined by nearly 14% from a recent high about a month ago.
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Meanwhile, ethereum, the second-largest cryptocurrency by market cap, also suffered following news of the lawsuit. Ethereum fell more than 5% to about $1,800.
But the biggest loser after the Securities and Exchange Commission filed the lawsuit was Binance itself, which has its own in-house token called binance coin. Binance coin, known as BNB, plunged by nearly 10% as investors fled Binance, given the uncertainty.
Indeed, the news about Binance has roiled the entire cryptocurrency ecosystem. Every single one of the 100 biggest cryptocurrencies was down on Monday afternoon, with many having plummeted by double-digit levels.
The turmoil in the digital assets space began just minutes after the SEC revealed the lawsuit in a filing in the District Court for the District of Columbia. The SEC sued both Binance and its CEO, Changpeng “CZ” Zhao. Federal regulators accused the company of lying to federal regulators as well as mishandling customer funds.
The SEC said that Binance, the world’s largest cryptocurrency exchange, had been secretly diverting customer funds to another trading entity controlled by Zhao, which then engaged in fraudulent trading. The play made Binance’s volume appear bigger than it was, officials allege. The complaint goes on to accuse Binance and Zhao of “blatant disregard” for federal securities law.
The lawsuit adds to the mounting legal scrutiny that Binance and Zhao are facing.
In March, the Commodity Futures Trading Commission announced it was suing Binance and Zhao for allegedly breaking U.S. regulatory law, labeling the firm’s compliance efforts a “sham.” The regulators charged that Binance, Zhao, and other entities operate the exchange in violation of CFTC regulations and the Commodity Exchange Act.
Binance released a statement addressing Monday’s latest lawsuit and said that while the company takes the SEC’s allegations seriously, they should not be subject to enforcement action. The exchange said it had engaged in “good-faith discussions” with the SEC and has “worked hard to answer their questions and address their concerns.”
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Binance also appeared to frame the SEC lawsuit not only as an affront to the company but an attack on the cryptocurrency space more broadly.
“Today’s action is another in a line of examples where, as with other crypto projects facing similar suits, the Commission has determined to regulate with the blunt weapons of enforcement and litigation rather than the thoughtful, nuanced approach demanded by this dynamic and complex technology,” the statement read.
