The FTX collapse changed a lot of things for the crypto industry. There was a change in the perception of the crypto industry by both people and the government. So, this mostly led to tight crypto regulations affecting exchanges like Binance.
What Happened to Binance?
- Even before the collapse of FTX, Binance had a large chunk of the crypto industry as its user base. However, the collapse of FTX made many countries increasingly restrictive with their crypto laws.
- Especially in the United States, there was a lot of shake-up. So, it looks like the decline of Binance was after the collapse of FTX. So, instead of expanding further, things are becoming increasingly restrictive for the crypto exchange.
The Lawsuit From the SEC Against Binance
- The lawsuit from the Securities and Exchange Commission against Binance was one of the major things contributing to their downfall. So, the filing of this lawsuit was sometime in June this year. The staggering part was that it was a 13-charge lawsuit against the crypto exchange. So, the major highlight of this lawsuit was that Binance was operating in the United States without the necessary registrations.
- This made them an illegal entity in the country. Furthermore, there were also accusations of selling illegal securities to investors. Illegal securities, according to the SEC, are usually assets that are not under their approval. So, this lawsuit was one of the major things affecting Binance. It made a lot of users become wary of the crypto exchange.
Users Go On a Withdrawal Spree After SEC Lawsuit
- The effect of the lawsuit against Binance by the SEC was almost evident, and the impact was immediate. So, within 24 hours after this lawsuit, the crypto exchange saw massive liquidations from their users. According to data from Investopedia, Binance and Binance.US saw outflows of $778.6 million and $13 million, respectively. So, many of these investors were afraid that a situation similar to FTX would happen.
- The Binance token received the impact, too. So, there was a decline of around 12% since the announcement of the lawsuit, while its BUSD stablecoin lost another 1% of its market cap. Even months after the lawsuit, the amount of trading activity on Binance is no longer the same.
What Next For Binance?
- It will stake a lot of things for Binance to recover the faith of many crypto users. So, it will mostly depend on how the case with the SEC turns out.
- If Binance goes on to win the case, there will be a large influx of user base on their platform. However, losing the case will make many abandon the crypto exchange further.
Conclusion
Binance is one of the biggest crypto exchanges in the industry. So, there’s a lot of issues facing them for many months now. This is making a lot of users abandon the crypto exchange for other alternatives. So, the major problem here is their 13 charge case from the Securities and Exchange Commission.
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The information provided in this article is for informational purposes only and should not be considered financial advice. The article does not offer sufficient information to make investment decisions, nor does it constitute an offer, recommendation, or solicitation to buy or sell any financial instrument. The content is opinion of the author and does not reflect any view or suggestion or any kind of advise from CryptoNewsBytes.com. The author declares he does not hold any of the above mentioned tokens or received any incentive from the company.
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