Bitcoin slides to near 3-month lows after SEC sues Binance

June 6, 2023 5:53 AM EDT -- Bitcoin prices fell sharply to near three-month lows on Monday after U.S. regulators sued crypto exchange Binance and its head Changpeng Zhao over allegedly violating several instances of securities laws.

The Securities and Exchange Commission (SEC) filed a complaint listing 13 charges against Binance, Zhao, and the U.S. arm of the world’s largest crypto exchange. The regulator alleged that Binance was operating a “web of deception,” by inflating its trading volumes, misusing customer funds, and also lying to investors over its regulatory compliance.

The move marks an escalation in the regulatory crusade against the crypto industry seen this year, coming just months after the U.S. Commodity Futures Trading Commission also accused Binance of similar violations.

Crypto prices sank after the SEC’s announcement. Bitcoin fell 5.1% to a near three-month low of $25,753.1, while BNB, Binance’s native token, slid over 9%.

The SEC complaint accused Binance of commingling user funds with a separate trading firm owned by Zhao, echoing the charges against now-bankrupt exchange FTX, which had allegedly carried out a similar practice, which eventually led to its collapse in November.

Binance said it “respectfully disagree(d)” with the SEC charges, and that it will defend its platform “vigorously.” Zhao also criticized the SEC's action in a series of tweets.

The SEC suit heralds more regulatory pain for the crypto industry, which has been reeling from increased scrutiny after a series of high-profile bankruptcies through 2022.

Recently, the commission had also threatened action against Coinbase (NASDAQ: COIN) over noncompliance with securities laws. Coinbase shares slumped 10% on news of the Binance suit.

Crypto prices crashed last year after the Federal Reserve began raising interest rates, bringing an end to the easy monetary environment that had initially fostered the industry.

The market has since struggled to recover even a measure of the record highs seen in 2021, and has traded largely rangebound in recent months.

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