blockworks.co
The native digital asset of the world’s largest exchange is facing significant sell-side pressure after the US commodities regulator announced legal action against Binance and its CEO.
The CFTC filed suit against the exchange and CEO Changpeng Zhao for allegedly violating trading and derivatives laws. Binance’s former chief compliance officer, Samuel Lim, is also named as a defendant in the suit.
Zhao said in a statement late Monday he disagrees with the “characterization of many of the issues” alleged in the CFTC’s complaint.
A spokesperson told Blockworks the company has made “significant investments” to ensure it did not have US users active on its platform — from boosting compliance staff to implementing market surveillance and investigative tools.
Binance’s BNB token — the utility of which is derived from reducing fees on the exchange — fell more than 6.2% on Monday to $308, the hardest hit among the top 20 cryptos by market value.
BNB is the fourth-largest crypto by total market capitalization with a value of $48.7 billion, Blockworks Research data shows.
Broader market
Other exchange tokens have fared better.
Rival exchange Huobi’s native token (HT) was down 3%, as of 7:30 p.m. ET, while Crypto.com’s token (CRO) had shed 4% on the day. LEO, which is used for trading fees and other services for the Bitfinex exchange — was down about 3%.
Those moves are in line with the broader digital asset market sell-off over the last 24 hours.
Bellwether asset bitcoin has shed 3.2% of its value to $27,000, technically its steepest decline since the start of the month. The industry’s total market capitalization, which measures the value of all crypto in circulation, has dipped 2.3% to $1.17 billion.
It appears the CFTC is seeking to strike a legal hammer blow against the exchange in an attempt to do what others around the world have failed so far — bring Binance under their purview.
“Obviously if Binance goes under due to overwhelming fines then it’s unlikely BNB is worth much anymore,” Xavier Ekkel, founder of DeFi trading platform prePO told Blockworks.
The asset, however, may retain some “ghost value,” similar to how FTX’s native token, FTT, managed to retain a portion of its value despite the collapse of Sam Bankman-Fried’s empire, Ekkel added.
A hit to BNB’s value follows from the start of the month’s turmoil for another Binance branded token — its BUSD stablecoin — which faced regulatory actions from the New York Department of Financial Services (NYDFS) and the SEC. Several on-chain metrics are now pointing to a swift end for BUSD.
Binance declined to comment on BNB.