Binance Faces Potential Lawsuit from the US Department of Justice

The SEC’s Lawsuit and Fraud Allegations Against Binance

The American Securities and Exchange Commission (SEC) recently initiated legal action against Binance in early June. The agency accused the cryptocurrency exchange of offering unregistered securities, as well as engaging in fraud and market manipulation. Now, the US Department of Justice is considering filing another lawsuit against Binance for fraud. However, authorities are mindful of the potential negative impact on consumers.

SEC’s Unusual Move and Collaboration with the US Department of Justice

According to sources reported by Semafor, the SEC’s decision to file a fraud-related lawsuit against Binance before the US Department of Justice is uncommon, especially in high-profile cases. Generally, the SEC collaborates with the Department of Justice in such matters. Legal experts suggest that the SEC’s accusations resemble criminal charges.

In light of this, it is likely that the US Department of Justice will also proceed with legal action against Binance. However, the Department cannot publicly announce its suspicions until they have solid evidence. This precaution stems from the lessons learned after the Enron scandal, where the impact on consumers, employees, and shareholders of major companies was carefully considered.

Nevertheless, the applicability of such concerns to Binance remains uncertain given the “legal gray area” of the cryptocurrency industry. Semafor highlights that customers should be aware of the higher risks associated with trading on unregulated exchanges compared to regulated ones.

US Department of Justice Concerned about Crypto Bank Runs

The US Department of Justice appears to be cautious about potential repercussions. In the case of Binance, a similar situation to FTX’s bank run could arise. FTX faced bankruptcy last year when it was revealed that it did not have sufficient funds to repay its customers. As a result, people started withdrawing their money in panic.

Despite the SEC’s lawsuit causing a significant decline in trading volume on the Binance platform, it remains the largest cryptocurrency exchange globally.

Tags: Binance, Criminal Activities, Exchanges, Regulations, United States