Lawsuits brought by the SEC against Coinbase and Binance have led to the collapse of altcoins, as SEC Chairman Gary Gensler is only willing to consider Bitcoin a commodity. In his view, other coins are securities that crypto exchanges must be licensed to operate.
Because of the wave of sell-offs, the share of altcoins, excluding Ethereum and stablecoins, has fallen below 20%. Many of them have collapsed by over 80% from their all-time highs.
Challenging times await BNB investors: a wide range of allegations have been made against Binance, including that it deliberately circumvented restrictions when dealing with US customers, commingled funds and engaged in market manipulation.
According to former SEC Head John Reid Stark, the Department of Justice will soon join the prosecution process. This is evidenced by the regulator's application to freeze all accounts of the US unit in the absence of money laundering and tax evasion charges.
Traders are already buying rumours, with open interest in BNB reaching 42%, while most altcoins have declined after a wave of sell-offs.
The funding rate collapsed to -0.08% from neutral in early June. A negative rate indicates the significant dominance in futures contract trading of bears, who are forced to pay a premium to the few buyers.
BNB is trading at a 17% discount after the charges but is still among the top 5 coins by market capitalisation.
However, if the Department of Justice were to file charges and freeze the US unit's accounts, it would deal a further blow to BNB's position. Given these circumstances, traders ramped up sales. Some have been overzealous with leverage, which has already led to a forced closure of several bearish positions and a short squeeze. BNB saw the fourth-most liquidated positions in the last 24 hours (third-most if only sellers are taken into account).
However, the outlook for BNB remains negative, and the likelihood of further price declines remains high. The SEC has charged both Binance's US unit and the company's CEO, Changpeng Zhao.
StormGain Analytical Group
(platform for trading, exchanging and storing cryptocurrency)
