Binance, a major crypto exchange, and its founder Changpeng Zhao have been charged by the U.S. Securities and Exchange Commission (SEC) with securities violations.
The SEC alleges that Binance and Zhao violated securities laws by mixing investor funds with their own and operating as an unregistered securities exchange.
This news has had a negative impact on the cryptocurrency market, with Bitcoin down more than 5% (now trading at below $25,800) and shares of Coinbase Global, another major crypto exchange, down 12% (trading at $58.26 at the time of writing).
Read more: Can Bitcoin’s bull rush to $30k stall?
In addition, Ether dropped more than 5% to $1,816, according to Coin Metrics.
Binance Coin, a token used to pay transaction and trading fees on the Binance exchange, tumbled 9.5%, now trading at $277,47.
In a blog, Binance responded to SEC complaint via blog, expressing disappointment with the agency’s enforcement approach. The exchange claims to have cooperated with the SEC’s investigations and engaged in good-faith discussions to settle, but the SEC chose to litigate instead. Binance also emphasized that user assets on their platforms are safe and secure.
This lawsuit is part of a broader crackdown on the crypto industry by U.S. regulators, with the SEC charging several other companies with offering unregistered securities to investors.
Bitcoin has also been struggling, with its worst month of trading since November and technical analysts seeing $25,200 as a key level to watch for on the downside.
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