In a recent development in the ongoing legal battle between the United States Securities and Exchange Commission (SEC) and Binance.US, a federal magistrate judge has denied the SEC's request for immediate access to Binance.US's software. The judge, while presiding over a hearing on September 18, expressed reluctance in granting this request, calling for the SEC to provide more specific requests for discovery. This decision represents a partial setback for the SEC in its pursuit of the leading cryptocurrency exchange.
In related news, trading activity on the platform has hit new lows as the exchange grapples with a series of unprecedented challenges, including the latest regulatory investigations and the departure of key executives. On 16 September 2023, Binance.US recorded a meager trading volume of just $5.09 million, marking a significant decline from its previous highs. This decline in trading activity can be attributed to the ongoing scrutiny from regulatory authorities and internal upheavals within the organization.
Along with the dwindling trading volume, the Binance ecosystem’s native token Binance Coin (BNB) saw its price drop slightly during the past 24 hours. Despite this negative daily performance, the altcoin remained in the green zone on the weekly timeframe.
The SEC's Motion to Compel
The recent hearing was convened to address the SEC's motion to compel Binance to provide detailed information and make its executives more available for depositions. This motion has been a point of contention between the SEC and Binance in recent weeks. The SEC's persistent efforts to access Binance's internal information have intensified since it filed a lawsuit on 5 June of this year against Binance.US, its international affiliate Binance Holdings Ltd, and CEO Changpeng "CZ" Zhao. The lawsuit alleges the exchange's involvement in the sale of unregistered securities.
Judge Faruqui's Decision
During the hearing, Judge Faruqui expressed his disinclination to grant immediate access to Binance.US's software. Instead, he suggested that the SEC should formulate more specific requests for discovery and engage a broader range of witnesses. This decision reflects the judge's desire for a more targeted approach to the investigation, encouraging the SEC to provide clearer parameters for their information-seeking efforts.
The SEC's Challenges with Binance.US
The SEC has encountered significant obstacles in obtaining information from Binance.US throughout the course of the legal proceedings. On 15 September 2023, the SEC accused Binance.US of noncooperation in the investigation. The regulator cited Binance.US's holding company, BAM Trading, for producing only 220 documents during the discovery process, many of which were described as "unintelligible screenshots and documents without dates or signatures." Additionally, BAM Trading had been reluctant to produce essential witnesses for deposition, agreeing to only four depositions that it deemed appropriate.
Binance has consistently characterized the SEC's repeated requests for discovery as "unduly burdensome." Despite this characterization, the SEC has asserted that Binance is being uncooperative, despite previously agreeing to a consent order regarding discovery in the SEC's case against it for alleged unregistered securities operations and other related allegations.
The Impact of the Decision
Judge Faruqui's decision to deny the SEC immediate access to Binance.US's software and other documentation is a partial setback for the regulator in its ongoing case against the exchange. One of the central concerns that the SEC has with Binance.US revolves around the custody of customer assets. The regulator believes that a more thorough investigation into Binance.US is necessary to uncover potential links to the global arm of the exchange.
Decline in Trading Activity
The lowest amount of trading activity for Binance.US that was recorded this month was on 9 September 2023, when trading volume plummeted to a mere $2.97 million. This stark decline stands in stark contrast to just under a year ago on 17 September 2022, when the exchange boasted a robust trading volume of approximately $230 million. The sharp drop in trading activity can be attributed to a confluence of factors, including regulatory pressures and a reduction in the number of available token pairs for trading.
In addition to regulatory woes, Binance.US has also been plagued by internal challenges. Brian Shroder, the then-CEO of Binance.US, resigned recently, joining a growing list of global executives who have departed from the organization in recent weeks. Following Shroder's departure, Head of Legal Krishna Juvvadi and Chief Risk Officer Sidney Majalya also announced their resignations. Speculation surrounds these departures, with reports suggesting they are linked to an ongoing investigation by the U.S. Department of Justice into Binance, CEO Changpeng “CZ” Zhao, and Binance.US.
In response to rumors regarding Shorder's resignation, CZ stated on social media platform X (formerly Twitter) that the executive was taking a "deserved break." CZ commended Shorder's contributions, highlighting his role in raising capital, improving product and service offerings, solidifying internal processes, and expanding market share at Binance.US.
The development in Binance.US’s legal tussle with the SEC did not have a positive impact on the exchange's native utility token, Binance Coin (BNB). According to data from the cryptocurrency price tracking website, CoinStats, BNB’s price slipped 0.64% during the past 24 hours. Despite this, the altcoin’s weekly performance remained in the green zone at +2.83%. Overall, the cryptocurrency’s latest price movements resulted in BNB changing hands at $218.09 at press time.
Price chart for BNB (Source: CoinStats)
In addition to weakening against the Dollar, BNB was also outperformed by the market leader Bitcoin (BTC) throughout the past day of trading. CoinStats indicated that BNB had weakened 0.29% against the leading cryptocurrency. Consequently, 1 BNB token was estimated to be worth 0.00801905 at press time.
Meanwhile, BNB was able to establish a 24-hour peak of $220, but had since retraced to trade at its current level. Nevertheless, the altcoin was still trading closer to its daily high than its low for the same period, which was situated at $215.20.
From a longer time frame perspective, BNB’s monthly performance was in the green zone, and stood at +1%. The same cannot be said for its price performance over the past 12 months, however, as the altcoin’s price was still down around 20% for this period.
Daily chart for BNB/USDT (Source: TradingView)
From a technical standpoint, the price of BNB was trading above the 20-day EMA line at press time. If the cryptocurrency is able to close today’s daily candle above this technical indicator, then it may continue to rise to above the next threshold at $220 - ultimately flipping the level into support. Thereafter, BNB’s price will have a relatively clear path to rise to the subsequent price barrier at $230.10 within the following few days.
On the other hand, a daily candle close below the 20-day EMA line at around $215.60 today may be followed by the altcoin dropping to $210 in the following 48-72 hours. Continued sell pressure may even force BNB’s price below this crucial mark - leaving the altcoin at risk of continuing its downfall to potentially reach $200.
A bullish scenario may be more likely to take place, however, given the fact that a noteworthy bullish technical flag was on the cusp of being triggered. At press time, the 9-day EMA line was looking to cross above the 20-day EMA line. Should these two technical indicators cross, it will signal that short-term momentum for BNB has shifted in favor of bulls.
Subsequently, BNB’s price may have the support needed to ascend towards the previously-mentioned $230.10 mark. Adding credence to this bullish thesis is the daily RSI line, which was positioned above the daily RSI SMA line at press time. This suggested that buyers were gaining strength. Furthermore, the RSI at 50 meant that there was still some room for BNB’s price to move towards the upside before it enters into overbought territory.
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