On 5 June, Binance and its affiliates were sued by the US Securities and Exchange Commission for committing 13 different offenses within their operations.
However, the SEC’s explanations, listed in a 136-page document, do not convince the crypto community, which has gathered on Twitter to defend its rights and fight the FUD (Fear, Uncertainty & Doubt) created by the US agency.
Tempers are running high and the issue is becoming increasingly sensitive.
Let’s delve into the matter together.
The SEC’s lawsuit and the effects of FUD against Binance
2 days ago cryptocurrency exchange Binance suffered a wave of FUD after the US SEC filed 13 formal charges in New York District Court suing Changpeng Zhao (CZ) and his company.
Initially, the news was not taken at all well by investors, who rushed to withdraw all the funds they held within the exchange, fearing that what happened in November 2022 with FTX might happen again.
Binance immediately denied all allegations, responding that it will vigorously defend itself in court against the SEC‘s slanders.
In any case, despite the fact that there were no factors pointed to the exchange’s liquidity problems and despite the fact that the exchange made its proof-of-reserves public, users preferred not to take a chance.
The result, according to Nansen’s data, was an asset outflow on Binance.com of $2.68 billion on the Ethereum chain and $3 billion overall multichain, in just 24 hours after the news broke. (netflow of $1.43 billion)
The rush of withdrawals from the exchange does not seem to have put a dent in the exchange, which enjoys $54 billion in assets held and can afford to deal with such situations.
At the time of writing, the situation seems to have stabilized on Binance.com while other capital leaks are happening right now on Binance.US on which the SEC has threatened an asset freeze.
Beyond the momentary scare that the news may have caused the crypto community, the fact remains that many users have suffered speculative losses.
In the 2 hours following the filing of the SEC’s lawsuit and the spread of FUD on social media, Bitcoin lost about 5% of its value, changing price patterns that had previously formed.
As a result, many traders were blindsided by the crypto asset’s crash, losing a lot of money.
One user in particular, with the nickname “Ash Crypto,” claimed on Twitter that he lost the equivalent of an entire Lambo, a sports car so beloved by crypto traders, because of Binance FUD.
Crypto community unites to fight FUD against Binance
The FUD against Binance was immediately halted the following day when the Securities and Exchange Commission chose another scapegoat to attack, namely Coinbase.
After the lawsuit against Binance, the SEC and its Chairman Gary Gensler have targeted the US exchange Coinbase, accusing it of violating certain registration laws.
Incredibly, the federal agency’s new attack did NOT create further turmoil in the market, instead helping to spread awareness among the crypto world of the injustices brought forth by the SEC.
How is it possible that the same commission granted Coinbase‘s IPO in 2021 when, according to recent allegations, it would not be a registered broker and would have been operating illegally on US soil since 2019?
This blatantly contradicts the SEC’s own claims that it is confusing investors.
The entire crypto community in response to the onslaught against Coinbase and the FUD against Binance has responded loudly by highlighting the federal agency’s double standards and obscurities.
In particular, Charles Hoskinson, founder of Cardano, expressed solidarity with Binance by explaining that the SEC’s moves are part of a strategy concocted to favor the future entry of CBDCs into the market, to the detriment of cryptocurrencies.
In fact, the SEC would like to hinder crypto progress in the US by avoiding any kind of collaboration with the country’s providers, and by fueling diatribes between proponents of libertarianism and those of authoritarianism.
CZ himself, CEO of Binance, has expressed doubts about the federal agency’s good faith in wanting to “protect” US investors.
The SEC’s move only sets the stage for a move away from the industry in the US, encouraging entry into the industry by players from other countries.
Changpeng Zhao wonders if indeed the SEC is protecting investors from danger from the markets or protecting itself and political interests of the powerful.
The situation reeks of rot.
A reflection on possible future scenarios
The issue of the FUD created against Binance and the recent allegations against Coinbase have only fortified the crypto community, which is now tired of the SEC’s bullying.
Opinions of distrust toward the US federal agency, which has now uncovered its cards highlighting political interests behind its activities, are spreading on Twitter.
The same SEC that years ago got “fooled” (or perhaps was also involved) by the biggest bluff in the history of finance by Berni Madoff is now bluffing its own public, spreading false and contradictory information to the investors it is supposed to protect.
The same agency that was unable to detect FTX’s fraudulent activities and anticipate the bankruns of Genesis, Voyager, and Blockfi is justifying its incompetence with a general attack on the cryptocurrency industry.
In any case, SEC or no SEC, it is evident how cryptocurrencies do not give a damn about US regulations and the opposition of proponents of authoritarianism.
Bitcoin in particular was created with the characteristic of being censorship-resistant and potentially usable anywhere in the world where there is an internet connection.
If the United States were to truly hinder the development of the industry by forcing exchange providers out of business, the entire industry would move elsewhere, without a shadow of a doubt.
The industry has reached such capitalization and importance that it can no longer be ignored, so there will always be someone ready to welcome it with open arms, supporting innovation and explicitly gaining from it.
In support of this argument, it is worth mentioning that despite the FUD created and the heavy accusations, Bitcoin has quickly recovered all the dumps of two days ago, returning to the $27,000 area.
Such a pronounced recovery only serves to illustrate Bitcoin’s resilience and indifference to politically motivated issues.
Beyond price action, which may be more or less bearish in the coming days, it is important to understand that reversals such as these imply a very specific meaning:
Bitcoin is here to stay. Crypto is here to stay.