The Brawl Between Binance and American Justice : The Thorny Question of Fraud
Defi and Exchanges

The Brawl Between Binance and American Justice : The Thorny Question of Fraud

The world’s largest cryptocurrency exchange, Binance, finds itself in the crosshairs of the US justice system for fraud. But this legal battle could trigger an FTX-style scenario, with potentially disastrous consequences for the markets. Find out how Binance’s size and weight make this case complex and difficult to resolve.

At the heart of the cryptocurrency tumult, Binance, the world’s largest exchange platform, finds itself caught in a tug-of-war with the US justice system, which is reportedly considering prosecuting it for fraud, according to anonymous sources relayed by New York media outlet Semaphor. This accusation is the latest addition to an already busy legal landscape for the company, but it is Binance’s sheer size that has the Justice Department worried.

The US authorities fear that any attack on Binance could trigger a “bank run” similar to that seen during the collapse of the FTX platform. In this apocalyptic scenario, investors would panic and withdraw their funds en masse, jeopardizing Binance’s ability to provide sufficient liquidity. Such a collapse of Binance US could trigger a devastating shockwave:

“This could cause a run on the exchange similar to the one that occurred on the bankrupt FTX platform, resulting in losses for customers and potentially causing a panic on the crypto markets.”

Binance! Very complex!

This situation reveals Binance’s unprecedented status, reaching such a size and influence that it is perceived as “too big to fail“, bringing precarious stability to the markets. With a significant market share, representing 66% of centralized crypto transactions last February, and currently handling half the volume of centralized platforms, Binance has become a key pillar of the cryptocurrency ecosystem.

For the judiciary, this is a tricky equation to solve, as protecting the platform’s customers without disrupting the markets is a real challenge. Prosecutors are thus considering various approaches, such as fines, deferred prosecution agreements, or even no prosecution at all, in order to punish the company while maintaining relative stability.

Yet Binance has found itself under fire from a number of accusations of late. The Security and Exchange Commission (SEC) is also pursuing it, accusing it of failing to properly register its activities in the United States. What’s more, a Wall Street Journal article recently revealed that Binance had allegedly carried out $90 billion in transactions in China, a territory where it is not supposed to operate. The cryptocurrency giant is therefore under attack from all sides, and its stature as a colossus could well be seriously threatened in the coming months.

The legal battle between Binance and the US justice system promises to be a complex one, with high stakes for the entire crypto-market. The next developments in this case will be closely scrutinized by players in the world of decentralized finance, as the outcome of this battle could redefine the fragile balance of this constantly evolving universe.

Article written by:

Laeti Marison, also known as SatoshiBelle, is a multifaceted professional with a passion for community management, content creation, and digital marketing. With a diverse background in various roles, Laeti has consistently demonstrated her expertise and dedication in the field. Recognizing her potential, Laeti then took on the responsibilities of a Project and Community Manager at Magna Numeris and Cartam from November 2018 to March 2021. In this role, she showcased her ability to successfully lead projects and foster strong relationships within the community. Currently, Laeti serves as an SEO content writer, Digital Marketing Manager, and co-founder at magazine, starting from February 2022 till now. Through her expertise in digital marketing and her passion for the crypto industry, she has contributed to the success of the magazine, ensuring its content remains relevant, engaging, and informative.

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