Two days after the US Securities and Exchange Commission sued Binance for violating securities laws and operating a “web of deceptions,” the native coin of the Binance Smart Chain ecosystem, BNB, is trading 12% below Monday’s opening. The token is down 1.26% over the last 24 hours and dropped as low as $268 on Wednesday as the sell-off continues.
The latest second SEC lawsuit against Binance rival on Tuesday brought crypto prices to multi-month, with the total crypto market capitalization dropping to as low as $1.03 trillion, levels last seen in mid-March.
Note that the SEC lawsuits mentioned more than 13 crypto assets listed on both Binance and Coinbase but excluded Bitcoin (BTC) and Ethereum (ETH). As a result, these two cryptos rallied on Tuesday, with BTC rising as much as 7% to areas above $27,000 and ETH climbing to $1,900, as investors were reassured that US regulators do not view them as securities.
SEC Sues Binance and CEO Changpeng Zhao
On June 4, US SEC sued the world’s largest crypto exchange and its CEO, Changpeng Zhao, for allegedly violating securities law, claiming the Binance ecosystems utility coin Binance Coin (BNB) and the stablecoin BNB are securities.
The regulator further claims that Binance Global, its American arm Binance.US and the CEO offered these tokens as unregistered securities to the general public.
In addition, the agency also accuses the company of artificially inflating its trading volumes, diverting customer funds, failing to restrict US customers from its platform, and misleading investors about its market surveillance controls.
The SEC stated:
“As a second part of Zhao’s and Binance’s plan to shield themselves from US regulation, they consistently claimed to the public that the Binance.com Platform did not serve US persons while simultaneously concealing their efforts to ensure that the most valuable US customers continued trading on the platform.
In the complaint, the SEC claims that Binance and its billionaire CEO secretly controlled, blended, and diverted billions of dollars of customer funds to a third-party entity owned by CZ “as they please.”
During an interview with the SEC Chair, Gary Gensler said
“We allege that Zhao and Binance entities engaged in an extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law.”
Binance responded to the accusations in a blog post, saying:
“While we take the SEC’s allegations seriously, they should not be the subject of an SEC enforcement action, let alone on an emergency basis. We intend to defend our platform vigorously. Unfortunately, the SEC’s refusal to productively engage with us is just another example of the Commission’s misguided and conscious refusal to provide much-needed clarity and guidance to the digital asset industry.
On his part, Changpeng Zhao responded to the allegations in a tweet saying that he recognizes the ongoing situation and implicitly advised Binance customers to disregard any fear, uncertainty, and doubt (FUD), fake news, or attacks. He added:
“Our team is all standing by, ensuring systems are stable, including withdrawals and deposits. “
Will The Latest Sell-off Take BNB Price To $200?
The SEC’s lawsuit has sent shockwaves in crypto assets across the board and dragged BNB down by as much as 12% following the news. This sell-off has seen the price breach the $300 support level, embraced by the 200-day Simple Moving Average (SMA).
While the $260 supports the Binance Coin, various indicators indicate a potential downward movement.
BNB/USD Daily Chart
Note that a daily candlestick close below $260 would initiate intense selling, directing the price toward the initial support level of $240. Subsequently, the $220 and $200 psychological level support may become the next target if the sell-off continues.
Both the Moving Average Convergence Divergence (MACD) Indicator and SMAs display solid bearish signals. The MACD is moving downward in the negative region, and the SMAs are signaling an impending bearish cross. This may happen in the short term when the faster-moving 50 SMA crosses below the slower-moving 100 SMA, adding credence to the downward outlook.
On the upside, the bulls will fight first to regain the $280 level before making a run for the 200-day SMA at $300. If they succeed, they will have decreased a more profound decline, setting the coin up for a recovery.
