Regulators on Binance’s Neck, but all is well for crypto

Binance, the largest and most popular cryptocurrency exchange is currently under investigation by the Internal Revenue Service and the Department of Justice.

The two departments suspect that the crypto exchange allowed American traders to participate in illegal trades by enabling them to buy derivatives connected to digital tokens. Traders can only purchase such derivatives from platforms registered with the US Commodity Futures Trading Commissions (CFTC).

In yet another accusation, the Cayman Islands Monetary Authority (CIMA) announced that the exchange is not registered to operate in the land, making its operations there illegal.

CIMA confirmed that neither the exchange nor its subsidiaries are registered, licensed, or even regulated on the Island. Binance has always claimed that it is registered and regulated on this island.

The regulator has launched an investigation to check the circumstances under which, Binance or its affiliates are operating on this Island. Similar investigations are also being carried out by the Malta Financial Services Authority in Malta and the United Kingdom’s Financial Conduct Authority (FCA).

Risk to the Cryptocurrency Market

Considering that Binance is an important pillar in global crypto trading, these announcements could sit badly with the cryptocurrency market. For starters, it creates FUD in an already volatile market that has been bearish for a couple of months now. It comes when the Bitcoin hash rate has been dropping as China cracks down on miners.

The investigations, if they lead to a crackdown on the exchange, could adversely affect the crypto market. Binance is already the largest exchange by volumes, and if it gets out of the picture, volumes could decline drastically. This could add to the downward pressure on the crypto market.

It’s not all is Doom and Gloom Though

However, all is not lost as Binance has come out fighting these investigations by clearing the air about their operations in the mentioned jurisdiction. The exchange spokesperson said that the platform operates in a decentralized manner and thus does not run exchange platforms in any particular jurisdiction.

They further said that they always strive to adhere to the laws in every jurisdiction where they operate. The firm’s CEO, Changpeng Zhao has been on record criticizing the very idea of having a centralized exchange platform.

The question of where Binance has centralized headquarters is not new, so these investigations might not have an impact on the trading activities. Binance announced that despite the UK regulator launching investigations, there will be no significant effect on the UK or any other traders worldwide. This confirmation means that there could be some light at the end of the tunnel.

Despite the sad news about this exchange, the market seems not to have been affected as it would. This means it has already factored in all the FUD surrounding Binance at the moment.

Besides, unlike in earlier years, there are so many exchanges now, and investors do not have to rely on a single exchange. This could be a huge factor in the continued market resilience.

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