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Binance is back in the spotlight again as U.S. regulators ramp up the pressure on the world’s largest crypto exchange. The latest accusation from the Securities and Exchange Commission is that some trading on Binance.US was a mirage.
The Securities and Exchange Commission has alleged that Binance.US inflated its trading volumes. This has been referred to as ‘wash trading.’
SEC: Binance Wash Trading Via ‘Dozens of User Accounts’
This is the latest accusation from the federal regulator, according to a July 24 report by the WSJ.
The SEC sued Binance.US and CEO Changpeng Zhao in June, alleging that a firm he controlled inflated trading volumes on the exchange.
The regulator claims that Binance.US inflated trading volumes “by using dozens of user accounts held by Sigma Chain, a Swiss trading company controlled by Zhao,” said the report.
A Binance spokesperson said that the wash trading allegations were “entirely unfounded.” They also added that these accusations are “based on a fundamental misunderstanding of the facts and a misapplication of the relevant law.”
The WSJ also cited a report by academics. It makes a bold claim that over 70% of trading volume on crypto exchanges comes from wash trading. However, they have not yet published the full research and have not confirmed the findings.
The practice has been outlawed in the US for stocks and bonds for almost a century. However, no such legislation exists for crypto exchanges. There is no regulatory framework for them or the asset class yet.
Binance Seeks CFTC Dismissal
In related news, Changpeng Zhao is planning to seek the dismissal of a Commodity Futures Trading Commission (CFTC) complaint.
The regulator accused the company of violating the Commodity Exchange Act. However, the situation remains that crypto has yet to be officially classified as securities or commodities.
According to a July 24 Reuters report, Binance will submit its response to the CFTC complaint on July 27.
The CFTC sued Binance in March, alleging the firm “offered and executed commodity derivatives transactions on behalf of US persons” in violation of laws.
The Binance native BNB asset has dropped 1% on the day in a fall to $238 at the time of writing. Furthermore, the coin has lost around 3% over the past week and is down 22.5% since the regulatory attack in June.
Disclaimer
In adherence to the Trust Project guidelines, BeInCrypto is committed to unbiased, transparent reporting. This news article aims to provide accurate, timely information. However, readers are advised to verify facts independently and consult with a professional before making any decisions based on this content.
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