Binance Probed by CFTC Regarding US Citizens and Derivative Markets

According to the report, Binance hasn’t been accused of any wrongdoing. The rumor of a potential close down of the exchange is still very much baseless.

By
Wilfred Victor
on
March 12, 2021
Category:
Breaking News

Introduction

Two factors drive the market - Fear and Greed. These two factors determine market sentiments at every given period in a market cycle. Both sentiments move a market price either upwards or downwards. Markets remain volatile as a result of these factors. Just today, the crypto community has been served a piece of new news that has been interpreted as Fear, Uncertainty or Doubt (FUD). This time it’s none-other than top crypto centralized exchange, Binance being at the spotlight - for the wrong reason.


Binance in the Spotlight

Binance which boasts of more than $91 in volume according to Coinmarketcap, is in the spotlight of the  Commodity Futures Trading Commission (CFTC). The agency in charge of US citizens’ derivative market is set to determine if US customers traded derivatives on it, violating US rules.

Recall that last year, there was a move from Binance, which resulted in splitting main Binance.com into two separate entities. The main Binance.com and Binance.us. A separate entity of the Binance exchange that services US customers. Binance.us is licensed and regulated by the United States. All coins currently listed on the US regulated exchange had to pass through specific regulations before opening for the American investing/trading community.

The community has been tipped off of what appears to be an investigation into the exchange derivative platform’s trading activities by the CTFC. It seems to show US customers activities on the Binance derivative platform, a move that is in clear violation of the US rules.

It should be worthy to note that Binance hasn’t been accused of any wrongdoings. According to people who asked not to be identified, this is merely an investigation with little to no consequences, as the matter is still very confidential.

CZ  Reaction

Binances’ chief reaction will be summarized in a short tweet made from his official handle - FUD.

The new investigation comes in less than 48hrs of its announcement of the company’s latest hire of the former U.S. Senator and Ambassador, Max Baucus. As a policy adviser he will be able to navigate the exchange’s relationship with U.S. regulators. The reaction from the famous exchange does not come as a surprise for most.


Market Reaction

A few hours after the investigation was announced, the market came to a sharp sell-off. Bitcoin had a fast spike down to the $55k range. BNB, the native coin of the crypto exchange, also witnessed a short crash but is currently recovering at the time of this report.

BNB/BTC pairing

The market sell-off is expected and normal. And according to the general sentiments, this is nothing compared to past impacts with news of this scale. The Hodl mantra became even much higher as both tags “Binance Investigation” and “Binance” trending number 1 and 2 respectively on crypto Twitter.

The community’s consensus is that this piece of news at the time of the raging bull market of cryptocurrency is merely an attempt at Fear Uncertainty and Doubt (FUD). It has been scoffed at by a lot of players in the industry.


In Conclusion

The maturity of the market isn’t surprising either. The market has been violently shaken in time past by news like this with sharp spikes and rapid sell-offs. But today’s reactions are fairly muted; at least the next 24hrs will determine that.

According to the report, Binance hasn’t been accused of any wrongdoing. The rumor of a potential close down of the exchange is still very much baseless as some uninformed users are starting to compare the situation with that of Bitmex hassles last year.

Remember to keep some funds in stable coins, top legacy coins, take profit along the way to your trade to stay solid on your emotional and psychological side. Because in reality, no trend lasts forever.

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Wilfred Victor

Ace finds himself as a blockchain enthusiast who is focused on growing with the entire crypto sector. He is an energetic and passionate writer who believes that all things are achievable.