Binance’s Token BNB Plummets Almost 10% In Biggest Drop This Year After SEC Sues Crypto Giant – Forbes

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A cryptocurrency created by Binance tumbled nearly 10% after the Securities and Exchange Commission sued the world’s largest crypto exchange Monday for allegedly running an illegal operation in the U.S., marking its biggest one-day drop so far this year as U.S. regulators continue to crack down on crypto companies.
Binance cryptocurrency BNB fell nearly 9% on Monday, following a suit by the SEC.
Binance Coin (BNB) fell 9.82% as of 5 p.m. Monday to a two-month low of $275.29, after falling nearly 5% in the first hour since the SEC announced its lawsuit—the second civil complaint targeting the crypto exchange in recent months, after an earlier lawsuit from the federal Commodity Futures Trading Commission.
BNB’s value has now dropped nearly 12% over the past week and is down more than 18% since April, according to data from CoinGecko.
Binance is not the only cryptocurrency tanking on Monday: Bitcoin dropped more than 5.5% to a two-month-low of $25,620, while Ethereum fell nearly 5% to $1,803 and Dogecoin decreased by more than 8% to just under 7 cents.
The SEC alleges Binance and its founder Changpeng Zhao misused customers’ funds, in some cases diverting them to an entity Zhao owned called Sigma Chain that conducted “manipulative trading” to inflate the volume of trading on the crypto exchange. The complaint also states that while Binance and Zhao claimed the company’s U.S. subsidiary was an independent trading site, in reality they controlled it behind the scenes, and the company allegedly allowed some U.S. customers to use the main Binance exchange. Zhao denied the allegations, calling the suit “unjustified” and one of many of the SEC’s “misguided actions” targeting crypto.
Shares of leading crypto broker Coinbase have also tumbled so far on Monday, falling by more than 10.5% to $57.69, though it’s still up more than 71% on the year.
Binance has faced a slew of legal trouble in recent months, as crypto markets remain shaky after dropping last fall amid concerns of an extended bear market called a crypto winter. In March, the CFTC filed a complaint in federal court in Chicago alleging Binance and Zhao offered crypto futures and other derivatives to U.S. residents without registering those offers through the CFTC. The suit also alleges the firm’s former chief compliance officer Samuel Lim aided and abetted Binance’s violations of U.S. law. Binance was also scrutinized for backroom asset shuffling between August and December 2022 involving roughly $1.8 billion it shifted to hedge funds without informing its customers, who were told the tokens were 100% backed, Forbes reported in February. The shifting marked a series of internal movements eerily similar to those at the bankrupt crypto company FTX. Binance had also pulled out of a non-binding agreement in November to purchase FTX’s non-U.S. operations after the firm’s collapse, citing the company’s liquidity issues “beyond our control or ability to help” after FTX’s users withdrew billions of dollars worth of its cryptocurrency from the platform.
Binance isn’t the only crypto firm facing allegations from U.S. authorities. In December, disgraced former FTX CEO Sam Bankman-Fried was charged with eight criminal counts, including wire fraud on customers and lenders, money laundering and violating U.S. campaign finance laws, after he was arrested in the Bahamas in the weeks after FTX’s sudden collapse. Bankman-Fried, who has denied the allegations and pleaded not guilty to the charges, allegedly defrauded customers by redirecting their deposits to pay expenses at crypto trading firm Alameda Research, which he co-founded. The SEC is also planning to take legal action against Coinbase over allegations it violated investor-protection laws, according to an SEC warning delivered to Coinbase, the Wall Street Journal reported.
SEC Sues Binance For Multiple U.S. Rule Violations (Forbes)
U.S. Regulator Says That Binance Illegally Helped Americans Trade On Its Exchange (Forbes)