- The reason for the investigation by the CFTC.
- The drastic drop of BNB as a result of the news
- About the reactions of the CEO of Binance
To the amazement of millions of users, Binance, one of the largest active cryptocurrency exchanges in the world by trading volume, was recently investigated by the Commodity Futures Trading Commission (CFTC) about the possibility given to some US citizens to trade cryptocurrency derivative assets. The incident was cited by a report carried out by Bloomberg on Friday, March 12, 2021.
The reason for the investigation by the CFTC.
As Binance exchange is not regulated to serve US users, the Commodity Futures Trading Commission, also known as CFTC, is trying to investigate regarding the access to the platform by some suspicious IPs. However, the commission has not yet charged the exchange's developers in any way, as it is simply conducting fact-finding research that will be carried out in the coming days.
The news comes from a report published by Bloomberg on Friday, March 12 in which some anonymous sources were quoted claiming that the CFTC is trying to shed light on possible accesses coming from the United States. Binance's spokespersons did not say much about the incident, but simply stated that, for their part, they always try to do their best to comply with all current protocols and regulations.
However, an article published in Forbes last year, had pointed out that the CEO of Binance invited some US users of the platform to log in via VPN, so they could obscure their IP address. However, accessing Binance via VPN would be very complicated, as KYC procedures are very strict and functional. In addition, the CEO responded to some provocations on Clubhouse by saying that their geofencing systems are among the best around.
Nevertheless, it has been stated that since US citizens very often try to access the platform through illicit systems, their goal is to further improve the security protocols.
Impacts on BNB and BTC
A drop in BNB, Binance's native token, was practically inevitable. In fact, following the report published by Bloomberg, the asset saw a sharp drop of over 6% within a few hours. However, co-founder and CEO Changpeng Zhao posted a tweet in which he stated:
“It’s not a bull market without some FUD. Ignore FUD, keep BUIDLing.”
According to Zhao, in fact, this is a temporary descent due to fear, uncertainty and doubt, and a period of recovery will happen very soon. Then again, this is not the first time the CFTC has investigated globally famous exchanges. Just think of the period in July 2019, when the commission had tried to investigate possible trading of US citizens performed on the BitMEX platform.
Bitcoin also saw a slight drop of 1.6% after touching a new ATH of over $60,000, dropping to around $56,000 a few hours after the report was published.
As mentioned above, this is not the first time an exchange has been investigated by the CFTC.
Binance, moreover, is one of the leading cryptocurrency trading platforms globally, standing out for being perhaps the most compliant with security protocols and regulations in place.
Moreover, there are many cases where companies have been investigated or falsely accused, which is why the CFTC's investigation should not be a big problem for the funds of all investors.
On the other hand, nothing is predictable, and as always we encourage you to keep up to date with the news of the moment.
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