- Major cryptocurrency exchanges Binance and Kraken are facing legal troubles, with the DOJ bringing criminal charges against Binance and its CEO while the SEC alleges Kraken has been operating illegally as an unregistered broker and dealer
- Tether, the largest stablecoin, assisted law enforcement in freezing $225 million worth of assets tied to an illegal human trafficking operation in Southeast Asia
- While concerning, the regulatory scrutiny facing Binance and Kraken may have limited broader impact given Binance’s diminished influence and Bitcoin’s resilience, but improved regulatory clarity would likely reassure crypto investors
Major cryptocurrency exchanges are facing legal troubles, causing prices to fall across digital assets. Both Binance and Kraken, two of the largest crypto trading platforms, received concerning news from U.S. regulators. In addition, stablecoin issuer Tether assisted law enforcement in seizing funds linked to illegal activity.
Binance Faces Criminal Charges From Department of Justice
The U.S. Department of Justice has brought criminal charges against Binance, the world’s biggest cryptocurrency exchange, as well as its founder and CEO Changpeng Zhao. This news initially boosted Binance Coin, the native token of the Binance ecosystem, as investors hoped the long-running investigation would finally be resolved. However, prices soon turned negative once the seriousness of the charges became clear.
Kraken Accused of Acting as Unregistered Broker and Commingling Funds
The Securities and Exchange Commission alleged Kraken has been operating illegally as an unregistered broker, clearing agency and dealer. Additionally, the regulator claims Kraken inappropriately mixed customer assets with its own funds. This comes after the SEC sued Kraken earlier this year for failing to register its staking service.
Tether Freezes $225 Million Linked to Human Trafficking
In more positive news, the Department of Justice praised stablecoin firm Tether for freezing $225 million worth of assets tied to an illegal human trafficking operation in Southeast Asia. Tether is the largest stablecoin with a market capitalization over $65 billion.
While concerning, the regulatory scrutiny facing Binance and Kraken may have limited impact on the broader crypto market. Binance’s diminished influence, coupled with Bitcoin’s resilience, signals the sector can withstand isolated issues at even the largest exchanges. However, improved clarity on regulations would likely reassure investors and boost prices across digital assets.