Binance Coin Price Drops 14.6% in a Week
Decline Continues Despite Eased Regulatory Risk Expectations
The U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Binance, the world's largest cryptocurrency exchange, causing the prices of coins issued by Binance to plummet. While the SEC's lawsuit was expected to ease regulatory risks, leading to a recovery in the prices of other coins, Binance-related coins showed weakness.
According to the global cryptocurrency market tracking site CoinMarketCap, as of 1:33 PM on the 8th, the price of Binance Coin was trading at $259.86 (approximately 339,500 KRW), down 6.89% from the previous day. Compared to a week ago, it has dropped 14.56%. Until the 5th of this month, Binance Coin was around $300, but it fell to $273 on the 6th and $256 the day before.
Binance Coin is a cryptocurrency issued by Binance, primarily used as a payment method within the exchange. It was issued through an Initial Coin Offering (ICO) in 2017. Binance Coin ranks 4th in market capitalization among cryptocurrencies. It is also listed on the domestic cryptocurrency exchange Bithumb, where about 0.06% of its total trading volume occurs.
The decline in Binance Coin’s price is due to the SEC filing a lawsuit against Binance and its CEO, Zhao Changpeng, accusing them of investor fund misappropriation, improper commingling of various funds, and operating as an unregistered broker. The SEC claimed that "Binance officials, including CEO Zhao, transferred hundreds of millions to billions of dollars through the bankrupt crypto-specialized bank Silvergate and regional bank Signature to accounts related to companies in Kazakhstan, Lithuania, and the Seychelles in the Indian Ocean." The SEC also requested the court to urgently freeze Binance’s assets in the U.S. Binance responded by stating, "Customer funds were not involved in the mentioned transactions, and these were normal business activities."
Due to the ongoing dispute between the SEC and Binance, Binance Coin took a direct hit. While SEC regulations may act as a short-term negative factor for the market, other coins like Bitcoin showed a recovery, driven by expectations that regulatory risks would be reduced and market order established in the long term. After the SEC’s action, Bitcoin’s price fell to around $25,400 (approximately 33.15 million KRW) but recovered to about $27,000 the following day.
Additionally, BUSD, a stablecoin issued by Binance, is also suffering from negative impacts. BUSD is designed to be pegged to $1, but as of 2:30 PM on the same day, it was trading at $0.9997. Its market capitalization also decreased from $5.16738 billion (approximately 6.7429 trillion KRW) at the beginning of the month to $4.89589 billion (approximately 6.3886 trillion KRW) on the 7th.
Clara Medali, Research Director at cryptocurrency data analytics firm Kaiko, said, "Market participants are reducing liquidity on exchange ledgers with the possibility of asset freezes in mind," adding, "No investor wants their assets to be locked up on an exchange."
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