The U.S. Department of Justice (DOJ) might pursue Binance, a cryptocurrency exchange, with fraud, according to a Semafor analysis. The revelation rocked the cryptocurrency market, driving down the value of both bitcoin (BTC) and Binance’s native BNB asset.
According to those with knowledge of the situation, American authorities are exercising caution since they are well aware of the potential repercussions that an indictment may have on the larger Bitcoin sector. The possibility of another occurrence like the FTX bank run has authorities considering other options, such as “fines and deferred or non-prosecution agreements.”
Binance refused to comment when asked about the situation, and the Justice Department has not yet responded to CoinDesk’s request for comment.
It was no secret that Binance was under investigation by American authorities; early this year, the Commodity Futures Trading Commission (CFTC) sued the exchange and its founder and CEO, Changpeng “CZ” Zhao. Allegations of “willful evasion” of US laws were the main focus of the complaint.
The lingering effects of Sam Bankman-Fried’s FTX’s failure also have an impact on the authorities’ vigilance. The repercussions from FTX’s failure caused the crypto market to suffer huge losses, damaged the credibility of the sector, and even forced Genesis, a prominent lending company (similar to CoinDesk, owned by Digital Currency Group), into bankruptcy court.
Authorities must carefully consider their options given that Binance is the biggest cryptocurrency exchange in the world in order to prevent any systemic effects that can negatively impact the whole sector.
The scenario around a possible indictment of Binance is still in flux, and the cryptocurrency world is keenly watching the events. The larger cryptocurrency market prepares for possible effects and awaits for developments from the US Department of Justice as regulatory agencies negotiate these tricky waters.
