Bitcoin and Ethereum Prices Take a Hit Following CFTC Lawsuit Against Binance
On Monday, Binance, the top cryptocurrency exchange in terms of trading volume, along with its CEO Changpeng Zhao, were sued by the Commodity Futures Trading Commission (CFTC).
The CFTC filed a lawsuit in a Chicago federal court, alleging that Zhao and Binance breached trading and derivatives regulations. Following the news of the case, the two largest cryptocurrencies by market capitalization, Bitcoin and Ethereum, dropped.
In the past hour, Bitcoin fell to $26,800 but quickly recovered back above $27,100 at the time of writing. Ethereum’s price decreased by 2.8% and is currently trading close to $1,700.
In the lawsuit, the CFTC claimed that Binance has been running a digital asset derivatives trading facility in the US since July 2019, allowing US residents to trade futures, swaps, and options on cryptocurrencies such as Bitcoin, Ethereum, and Litecoin.
The lawsuit also stated that Binance attempted to expand its presence in the US despite claiming to prevent US residents from accessing its platform.
The crypto exchange allegedly violated federal laws essential to the integrity and vitality of the US financial markets by failing to comply with regulations to prevent money laundering and terrorist financing.
The lawsuit presented messages from the encrypted messaging app Signal collected from Zhao’s phone, in which he instructed Binance representatives to use Signal to communicate with US-based customers.