SEC Sues the World's Biggest Crypto Exchange

A look at the market's reaction

Author

Nathaniel Whittemore
June 06, 2023

The Breakdown First Five - Tuesday June 6, 2023

Welcome back to The Breakdown First Five — the 5 most interesting and/or important stories in bitcoin, crypto, and markets to start your day.

5. Berenberg warns on Coinbase

Research firm Berenger said that Coinbase could lose up to 37% of revenue if the SEC files a lawsuit against the exchange. The Binance lawsuits could serve as a warm up for going after Coinbase, with many of the same legal issues around the securities classification of tokens, rewards programs and staking being put to the test. Coinbase stock dumped by more than 9% on Monday.

4. Margined Futures

Commercial exchange CBOE Digital has been approved to offer margined futures contracts. This will allow institutional firms to trade crypto with much less capital committed. CFTC Commissioner Christy Goldsmith Romero praised the firm’s approach to crypto trading for fitting in with existing market frameworks. Institutional trading continues to build out infrastructure as retail exchanges get smoked.

3. Looking Lower

Traders looked for a rebound as Bitcoin fell below $26,000. News of the Binance lawsuit pushed Bitcoin to fresh 3 month lows, but bullish dip buyers kept the price above pre-banking crisis levels. Big institutional players are moving money on this price action while derivatives markets pushed funding negative. Spot markets are showing little demand as retail remains sidelined.

2. Binance Run

With news of another lawsuit, Binance is facing yet another run on deposits. The exchange saw over $500M in outflows on Monday. At this rate, the run could compound to become as large as the $800M March run surrounding the banking crisis. Binance wallets still show $55B in assets on chain, calming nerves somewhat.

1. SEC Sues Binance

In their latest act of investor protection, the SEC has sued Binance for securities violations. The allegations include naming 10 independent tokens as securities along with BUSD and BNB. Two former Binance.US executives have testified. Allegations of commingling customer funds and general lack of appropriate controls. CZ was personally named as a defendant. Things are looking bad for Binance.

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Thanks for reading -NLW