Bitcoin decreases after CFTC charges crypto exchange Binance for allegedly violating trading regulations

March 29, 2023: On Monday morning, Cryptocurrencies dropped after the CFTC sued Binance, the significant crypto exchange in the world, for allegedly violating trading rules.

The price of bitcoin has decreased by 3% to $27,001.05, according to Coin Metrics. Ether decreased by 3% to $1,708.73.

In a filing in court, the CFTC, or the Commodity Futures and Trading Commission, stated that Binance violated eight facilities of a commodities trading law “created to prevent and detect money which launders and terrorism financing.” The lawsuit, filed Monday in a federal court in Chicago, could upend the exchange’s operations.

Dessislava Aubert, an analyst at crypto data giver Kaiko, said. It’s “the significant crypto exchange, and any U.S. regulatory action against it will have significant implications for the industry,” she said. However, bitcoin’s March rally had already slowed in the last week; the news about Binance primarily drove Monday’s down move.

The CFTC court filing follows Binance employees who have done to subvert the exchange’s compliance controls in China. Hence, CFTC alleges that Binance instructs its workers and customers to circumvent these controls.

“Many had knowledge Binance had a bullseye on its behind, but this is still unnerving some crypto traders,” stated Ed Moya, an analyst at Oanda. “Binance’s success is required to ensure a good part of the crypto-verse can grow.”

Crypto-exposed equities suffered from the news too. Coinbase and Microstrategy each came down 10%. Miners Marathon Digital, Hut 8 and Riot Platforms is losing nearly 8% each.

The losses came in tandem with increased bond yields, which pushed the tech-heavy Nasdaq Composite to decrease by 0.6%. Rising rates make future profits less attractive, like those promised by growth-oriented companies.

The CFTC’s complaint regarding Binance is the recent chapter in this year’s regulatory decrease on crypto businesses. It has been a significant price catalyst for bitcoin, supporting its divergence from its previously surged correlation with stocks. That relationship has been sitting at its lowest level since September 2021.

Monday’s initial drop was the most significant move for bitcoin this week when the Securities and Exchange Commission started Coinbase a Wells notice indicating the exchange identified potential violations of U.S. securities law.

On Monday, Cryptocurrencies quickly bounced off their lows, although they remained in the red. A similar thing happened on March 22 after Coinbase’s bad news.

Before Monday, the resource person had said the March rally might be petering out but that a long-term bullish formation has been established. Bitcoin is still on its way to capping a victory month, however. It has advanced 16% for the month, while ether has gained 6%.