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I hope you are all well and having an excellent day, welcome to CryptoGod-1’s blog on all things crypto. The crypto world has been rocked in the last week or so, with the popular exchange Binace facing issues from all sides. Here I will look at some of the recent ones to emerge following the SEC lawsuit, and what it means for the exchange.
Dutch Market Exit
On the 16th of June 2023 BINANCE announced they would be leaving the Dutch Market. They were forced to withdraw following their unsuccessful attempt at obtaining a virtual asset provider (VASP) license from the Dutch regulator, forcing them with no option but to leave the market. The exchange had been trying to find the best possible way to continue serving Dutch residents while being in compliance with Dutch regulations but unfortunately they were left with no other option than to leave the market.
Since the news was announced the exchange has stopped accepting new users to register from the Netherlands. Instead, only existing users are able to log into the exchange from the Netherlands, and will only be able to withdraw assets from the Binance platform. All purchases, trades, and deposits are no longer capable on the exchange, with Binace encouraging users in the Netherlands to withdraw their assets / funds from the exchange as soon as possible.
The news follows on from Binance having been forced to exit the Canadain, Cypriot, and Australian markets, and it may not end there. With the European Union having brought in its implementation of the Markets in Cryptoassets (MiCA) Regulation last month, there are fears that more hardships could emerge in the coming months. Binance has stated it is compliant with EU standards on the prevention of money laundering and financing of terrorism, but has found itself under investigation for allegedly providing digital asset services in an “illegal” manner and engaging in "acts of aggravated money laundering” in France. Other nations where Binance operates in the EU, such as Italy, Spain, Poland, Sweden, Ireland, and Lithuania, may be looking deeper into how the exchange operates within their nation.
It is also important to note that Binance has issued a cease and desist notice against Binance Nigeria Limited, a “scam entity.” purporting to be associated with Binance. The Nigerian Securities and Exchange Commission had ordered Binance to stop operating its unregistered exchange in the nation back on the 9th of June 2023, but as shown by CZ, not everything is quite as it seems.
BUSD Crashing
The stablecoin of Binance, BUSD, has seen its value dropping in the wake of all the recent news surrounding the exchange. It has lost another $1 billion in market cap, dropping down to the fourth position in the stablecoin rankings. With a a market cap of around $4.3 billion, down from $5.5 billion a month ago, BUSD sits right behind decentralized stablecoin DAI. The market cap of DAI has risen to more than $4.6 billion over the past couple of days, while USDC sits second with a market cap of around $28 billion. USDT remains in first with a market cap of around $83 billion.
This comes months after the New York Department of Financial Services (DFS) ordered Paxos, the crypto firm which issues the stablecoin, to put an end to the minting of BUSD tokens. The order was apparently due to a result of several unresolved issues related to Paxos’ oversight of its relationship with Binance, according to the DFS. A Wells Notice has also been issued to Paxos, meaning the SEC plans to sue the company over its BUSD issuance. This is because the SEC considers BUSD to be an unregistered security.
Paxos announced the ending of its relationship with Binance, and the immediate ending of its issuing of BUSD from the 21st of February 2023. However, the token is still redeemable and supported until February 2024.
In an interesting turn of events, USDT, the number one stablecoin, saw it dollar peg break last week after two major pools for stablecoin trading became heavily imbalanced. The balances of USDT on Curve’s popular 3pool, a stablecoin swapping pool comprised of USDT, USDC, and DAI, rose to over 70%, suggesting traders had swapped tens of millions of USDT for USDC and DAI. This put immense selling pressure on the stablecoin mere days after it had recorded a new record high market capitalization of over $83.2 billion.
Other stablecoins have not fared so well in terms of the record high market capitalization. USDC for example, number two in the list, has a market cap of around $29 billion, but its all time high saw it sitting at over $56 billion.
Agreement with SEC
On Saturday the 17th of June 2023 an agreement was reached between Binance.US and the US Securities and Exchange Commission (SEC) to ensure that no assets on the exchange will be frozen. This came after US Judge Amy Berman Jackson approved the agreement between the two, dismissing a previous temporary restraining order which would have seen all of Binance.US's assets frozen.
As part of the agreement, Binance Holdings, BAM Management US, BAM Trading Services, and founder Changpeng “CZ” Zhao will repatriate Binance.US customer assets. Added to this is the fact the US arm of Binance is prohibited from spending corporate assets other than to cover the costs of running its business, and to redeem any withdrawals from customers on the platform.
The agreement will also see Binance Global banned from accessing private keys of wallets, hardware wallets, or root access to Binance.US’s Amazon Web Services tools. The initial request to freeze the assets on Binance.US came as part of the lawsuit against the company and its founder Changpeng “CZ” Zhao from the SEC.
After a hearing on Tuesday the 13th of June 2023, where Binanace.US claimed blocking the flow of funds would detract from business and ultimately harm customers, they made a compromise to transfer US customer cryptoassets to new wallets with new private keys that would be under the sole control of US-based officers at Binance.US.
Former Chief of the SEC Office of Internet Enforcement, John Reed Stark, claimed that the agreement is "the most burdensome, awkward, inconvenient and far-reaching crypto-related orders in SEC history. He noted that if any Binance defendant violated any provision of this order, US DOJ could step in and file obstruction-related charges."
There are certain to be plenty more news articles emerging over the coming days, weeks, and maybe even months regarding Binance. Personally I still retain faith in them, and see this as more of a coordinated attack from the governments and regulators against crypto. However this war on crypto will play out remains to be seen, but one thing is for certain, it is very fascinating.
CryptoGod-1.
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