Binance Logo / Source: Adobe
The US Department of Justice (DoJ) is seeking a settlement of more than $4 billion from the world’s largest crypto exchange Binance as a proposed resolution to a yearlong investigation into the exchange, Bloomberg reported on Monday citing people familiar with discussions.
Cryptocurrency markets initially fell on the news but have since recovered.
Bitcoin (BTC) briefly dipped under $37,000, but has since recovered back above $37,500, while Binance-linked BNB (BNB) briefly dipped under $240 before pumping as high as the $260s.
As per the report, the DoJ and Binance could reach a settlement before the end of the month, though this settlement could reportedly include the prospect of Binance’s founder Changpeng Zhou facing criminal charges in the US.
An agreement would end the probe into Binance, which the DoJ accuses of engaging in money laundering, bank fraud and sanctions violations.
*US SEEKS MORE THAN $4 BILLION FROM BINANCE TO END CRIMINAL CASE
Source: Bloomberg | Coins: BNB
— db (@tier10k) November 20, 2023
Crypto Market Chop Explained
The cryptocurrency market’s choppy reaction to the Binance/DoJ headlines emphasizes just how sensitive the market is to news regarding the world’s dominant crypto exchange Binance.
Binance has so far accounted for around 37% of global spot crypto trading volumes this month, according to data presented by The Block.
Traders have long been fearful that Binance’s dominance is a major weak point for the crypto market, which could be seriously affected if something was to happen to the exchange like what happened to FTX just over one year ago.
Those fears became more acute in 2023 when the SEC sued Binance for allegedly operating as an unregistered securities exchange in the US, and on other charges of investor fraud, and when news emerged that the US DoJ was looking to press serious charges against Binance.
Binance has denied all accusations and always maintained that customer liabilities are more than adequately backed by reserve funds, staving off a potential “bank run” which was the death sentence for FTX last year.
The cryptocurrency’s knee-jerk sell-off on the Binance/DoJ headlines emphasises how jittery the market is to this theme.
But if a resolution between Binance and the DoJ is soon reached, this is arguably a positive, as it means greater certainty for the firm, which probably explains the market’s quick rebound.