This week, as has been the trend, regulators in the United States did not slow down. The Commodity Futures Trading Commission (CFTC) has formally filed charges against Binance, alleging violations of the Commodity Exchange Act. Despite the contraction of the markets, the gains registered in the previous week remained intact. Meanwhile, new revelations have emerged about the ongoing FTX case.
A spate of regulatory actions
The global trend of strengthening regulatory oversight of cryptocurrencies has been gaining momentum. Financial regulators around the world aim to provide clear guidance to the fledgling industry and protect investors. While the United States has been at the forefront, other nations are also implementing new measures.
The Hong Kong government, in particular, is actively seeking to revamp its regulatory framework on cryptocurrencies in a comprehensive effort to establish the city as a leading crypto hub in Asia.
On March 30, reports revealed that the Hong Kong Securities and Futures Commission is preparing to grant operating licenses to eight web3 companies by the end of the year, as a growing number of cryptocurrency-focused companies express interest in establishing a presence. in the region. Among them is OKX, which also announced the establishment of an office in Hong Kong with further plans to apply for a Virtual Asset Service Provider (VASP) license.
While Hong Kong actively promotes a favorable climate for cryptocurrency-related businesses and investors, other countries such as Denmark are tightening their grip. This week, the Danish Supreme Court ordered that income or capital gains from Bitcoin mining activities and investments be taxable.
Furthermore, a recent report said that during the Group of Seven (G7) forum, member countries want to adopt strict crypto laws following the recent implosions of CeFi platforms, including FTX.
Industry leaders condemn US regulatory efforts
Meanwhile, the US campaign against the local crypto industry continues. This week saw new enforcement actions and, as expected, opposing responses from cryptocurrency advocates. Industry figures complain that the United States appears to be more focused on enforcement than providing clear regulatory guidance.
On March 29, Coinbase warned that the country risks losing up to 1 million web3 developer jobs over the next seven years due to regulatory ambiguity and increased enforcement activities.
It is estimated that the country is losing approximately 2% of web3 developer jobs annually. On March 31, hours after the Coinbase report, Bittrex, one of the oldest cryptocurrency exchanges in the country, announced that it would be shutting down its operations in the country as of April 30 due to the unfavorable regulatory environment.
Amid the crackdown on the crypto industry, Gary Gensler, chairman of the US Securities and Exchange Commission (SEC), said the agency has the authority to classify a digital asset as a security. at their discretion, thus avoiding the need for standard legislation on the matter. Ripple CEO Brad Garlinghouse responded by emphasizing the potential risks of such an approach.
Despite recent tough enforcement measures, Elizabeth Warren, a United States Senator, did not budge and stood her ground, insisting on even stricter crypto laws. Warren, known for introducing legislation that many in the crypto community consider regressive, reiterated her position on the need for stronger regulatory measures or even the possible elimination of the industry.
Meanwhile, US authorities have joined South Korea in requesting the extradition of Do Kwon, co-founder of Terraform Labs, who was recently arrested by Montenegrin police. The US and South Korean authorities want to take Kwon back to their respective countries to face justice for the crimes he committed.
US CFTC Sues Binance
This week, the United States regulatory crackdown caught up with Binance, the world’s largest exchange by daily trading volumes. The United States Commodity Futures Trading Commission (CFTC) filed charges against the exchange on March 27 for alleged violations of the Commodity Exchange Act.
The CFTC’s case against Binance was based on the argument that cryptocurrencies such as ethereum (ETH), litecoin (LTC) and bitcoin (BTC) are commodities within its regulatory purview. According to the CFTC, Binance had violated the Commodity Exchange Act by failing to register as a futures commission merchant (FCM) and by failing to comply with necessary regulations when offering futures contracts.
Binance CEO Changpeng “CZ” Zhao was quick to address the agency’s allegations, stating that the claims are without merit and are not supported by factual evidence. Zhao highlighted Binance’s unwavering commitment to meeting regulatory requirements. He also emphasized the company’s active support of US authorities in their efforts to combat cryptocurrency-related crime.
He financial times it also alleges that Binance has been concealing its operational presence in China for years by deliberately concealing facts about its ties to the country. This was based on information from a leaked group chat between Binance CEO Changpeng Zhao and other executives and other documents.
Additionally, a well-known but pseudonymous crypto personality, who gained recognition for whistleblowing during the Terra scandal last year, posted a Twitter thread this week, uncovering multiple insider trading cases that took advantage of token listings. from Binance. In response, Zhao revealed that Binance had taken action against the individual and had frozen $2 million linked to the implicated address.
Despite the CEO’s efforts to address the growing fear, uncertainty, and doubt (FUD) surrounding the exchange, there were significant exits this week, according to data from CryptoQuant. In 24 hours, up to March 30, 4,505 BTC and 76,146 ETH had been moved.
Crypto Market Performance
Due to Binance’s influential position in crypto, the CFTC lawsuit forced sentiment lower, prompting a sell-off, especially of Binance’s ecosystem coin BNB.
Notably, BTC dipped below $28,000, falling 3.2% to a low of $27,133 on March 28. ETH also contracted, although the drop was not very steep over the same time period.
Meanwhile, XRP, the native currency of XRPL, outperformed the markets, posting significant gains above $0.40. Analysts attributed this stellar performance to the positive outlook surrounding the ongoing legal dispute between Ripple and the SEC.
Still, the overall market crash was short-lived. Most cryptocurrencies soaked up the selling pressure and rallied. BTC, in particular, posted encouraging gains, topping $29,000 on March 30.
Parallel data from CryptoQuant indicated that the whales had begun to accumulate as investors expected the main uptrend of most of Q1 2023 to continue. According to SingleQuant, a CryptoQuant Verified Author, the influx of bulls could support the prices in the medium term.
Overall, the crypto market is stable and remains bullish. Despite news that the United States government plans to auction off an additional 41,000 BTC associated with the Silk Road, the cryptocurrency and bitcoin appear to be holding firm. Justin Sun, the founder of Tron, proposed to buy the 41,000 BTC at a 10% discount to reduce the potential market impact of a large-scale sell-off.
As of this writing, the global cryptocurrency market capitalization rose 1.11% from $1.167 trillion at the start of the week, and currently stands at $1.18 trillion. This indicates that the global crypto market capitalization has added $13 billion to its value since the start of the week. BTC, in particular, is trading at $28,271, up 1.23% from $27,928.
Former FTX boss Sam Bankman-Fried charged with bribery
Sam Bankman-Fried, the founder and former CEO of FTX, agreed to new bail conditions that would restrict his access to the technology. In line with this, Bankman-Fried will receive a new mobile phone that can only access voice calls and SMS without Internet access.
Sam Bankman-Fried also faced new charges, as federal prosecutors alleged that he had offered a bribe of up to $40 million to at least one Chinese government official. The alleged bribe was aimed at unfreezing accounts belonging to Alameda Research, which had been frozen by Chinese authorities.
Additionally, on March 29, reports claimed that Sam Bankman-Fried had been funding his legal representation with funds from Alameda Research. According to the report, Bankman-Fried had donated several million dollars to his father from Alameda Research’s coffers to cover his legal expenses.
During the week, FTX debtors received a favorable update as OKX revealed intentions to release frozen assets worth up to $157 million linked to FTX and Alameda Research. OKX revealed that it would release the funds to FTX’s debtors, who continued to struggle for funds.
Meanwhile, FTX EU, FTX’s European subsidiary, launched a new website that allows its European clientele to easily withdraw their fiat balances. However, the website caters for fiat withdrawals and does not offer other services.
