How a Binance Collapse Could Take Down the International Crypto Market

Binance CEO Changpeng Zhao is facing increased pressure from regulators after a freeze on withdrawals in the European market left investors questioning the platform's longevity. 



The Street reported that: “Binance, the world’s largest crypto exchange by trading volume, is facing a protracted battle to maintain a European presence after recently exiting Germany, following regulatory challenges that are making the crypto exchange an unwelcome operator in multiple European countries, including Cyprus, the Netherlands, and the U.K.”

The Street reported in March that “Binance was forced to stop processing deposits and withdrawals in the U.K., after the company’s banking partner in the U.K. canceled its agreement with the exchange.”

“The Platforms, the intermediaries are doing things that we would never in a day allow or think the New York Stock Exchange or Nasdaq would do,” SEC Chair Gary Gensler said. “The platforms, often, are comingling and trading against you and have market makers that are on the other side of your trades, and we don’t allow that in the rest of our securities markets. This is a field rife with fraud, rife with huxters, and there are good faith actors as well, but there are far too many that aren’t.” 

John Reed Stark, the SEC's former office of internet enforcement chief, recently shared a Binance user’s notification that withdraws through SEPA were suspended. 

“Disturbing,” Stark said. “The SEC and FINRA should immediately send a team of auditors, inspectors and examiners to investigate what happened and, if appropriate, refer the matter to the SEC Enforcement Division or even DOJ. Oh wait, Binance is not registered. Never mind. Caveat Emptor.”

 

Reddit user Socialinfluencing made the startling report that “A possible contagion brewing in the crypto world that we shouldn't ignore.” that highlights customer complaints of Binance and how a collapse of the platform could send shockwaves across the financial market. 

“We are currently in a bear market and this is something very few want to think about but that makes the circumstances worse. Binance can feel the regulatory vice tightening and they cannot keep this up, liquidating their positions not to mention the amount of USDT and Btc trading pairs on their platform. This is just a reminder that no company is too big to fail in this space and Binance is starting to find that out,” Socialinfluencing said.

“You can only suffer so many regulatory setbacks and investigations by committed legal teams that work in tandem around the globe before you capitulate, Binance is there now. This may seem like a ' won't ever happen ' event but Ftx was actually doing quite well before the collapse, in fact they had built quite a stellar reputation and had big money vested in them. Binance doesn't have the confidence of the US, in fact it is being relentlessly pursued by the US and the EU, so what next?”

This comes amid reports that Binance is at odds with the western allies in the War in Ukraine as they face charges in Russia. 

Cryptoslate reported that “Binance continues to process transactions for at least five Russian lenders blacklisted by Western powers,” and that “there are reports that the US Department of Justice might be preparing a criminal action against Binance and its CEO, Changpeng Zhao, for violating US anti-money laundering laws.”

Beincrypto reported that “The continued decline of BNB has some speculating that a larger liquidation could be on the horizon. Crypto industry analysts fear a repeat of the FTX FTT token collapse in November that caused a cascade of catastrophes across the industry.

The Hill reports that Senators have attached an amendment to the 2024 National Defense Authorization Act that “requires regulators to set examination standards for financial institutions engaged in crypto activities. It also requires the Treasury Department to give recommendations to Congress regarding crypto asset mixers and anonymity-enhancing crypto assets.” 

Just like the collapse of FTX with owner Sam Bankman-Fried, how the Binance exchange protects the asset of the investor remains highly unregulated. 

Recovering Tech Entrepreneur Mike Alfred posted on X that “As BNB goes, so goes Binance. And BNB looks sick. BUSD is already dead in the water. If BNB breaks under $200, it could quickly collapse as the rats flee the sinking ship. This could get ugly quickly. Pull any remaining funds while the platform is still operational. Godspeed.”

Follow @wicksbororeport on X for your latest crypto news 

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