BNB faces a 25% drop after SEC sues Binance and CZ for securities laws violations

Key Takeaways:

• BNB risks losing another 25% by the month’s end.
• The bearish expectations intensify, given the SEC’s new lawsuit against Binance.
• CZ also faced allegations from CFTC, another regulatory watchdog.

YEREVAN (CoinChapter.com) – BNB, the native token of the world’s largest crypto exchange, Binance, dropped 7% on June 5 and traded at $283 ahead of the New York session. However, the token could face an additional 25% plunge by July due to bearish technicals and Binance’s troubles with the regulators.

Before jumping to the exchange’s legal woes, here are the technical factors.

BNB in a bearish rising wedge

BNB has been trading within a ‘rising wedge’ pattern since late 2022. The setup entails two converging trendlines and a powerful mid-range that take the token price incrementally higher while lowering the price swing, as seen in the chart below.

The rising wedge is a bearish reversal pattern predicting a drop equal to the wedge’s maximal height after the asset price action breaks below the support. BNB broke below the lower trendlines on June 4 and confirmed the rising wedge, pinning the target price as low as $208, or 25% below the current value.

A further price drop appears likely due to the declining trading volumes and the bearish MACD oscillator. Additionally, the new lawsuit against Binance confirms the expectations.

SEC files a lawsuit against Binance and CZ

The US Securities and Exchange Commission (SEC) filed a lawsuit against Binance and its chief executive Changpeng “CZ” Zhao, for “violating US securities laws,” sources reported on June 5.

This case arises from the Defendants’ blatant disregard of the federal securities laws and the investor and market protections these laws provide. In so doing, Defendants have enriched themselves by billions of U.S. dollars while placing investors’ assets at significant risk.

read the allegations against Binance and its CEO.

The regulator also alleged that Binance has “unlawfully solicited US investors to buy, sell, and trade crypto asset securities through unregistered trading platforms.” In doing so, the exchange has engaged in “multiple unregistered offers and sales of crypto asset securities and other investment schemes,” the SEC claimed.

Regulators further alleged that Binance has made “misrepresentations to investors” about controls they claimed to have implemented on Binance’s US platform.

The SEC allegations stated that the exchange raised “approximately $200 million from private investors” and attracted billions of dollars in trading volume from investors seeking to transact on the Binance.US platform.

CFTC has a bone to pick with Binance as well

Meanwhile, Binance faced allegations from the Commodity Futures Trading Commission (CFTC) in late March. The agency filed a lawsuit, alleging Binance and CZ also repeatedly broke US derivatives rules.

The officials stated that Binance, CZ, and former Chief Compliance Officer Samuel Lim were complicit in skirting rules, helping customers evade compliance laws, and putting up a compliance plan “just for show. “

The lawsuit, filed in a federal court in Chicago, states that Binance should have registered with the Commission. The agency also plans to seek severe penalties against Binance, including a permanent trading and registration ban.

For years, Binance knew they were violating CFTC rules, working actively to both keep the money flowing and avoid compliance. This should be a warning to anyone in the digital asset world that the CFTC will not tolerate willful avoidance of U.S. law.

CFTC Chairman Rostin Behnam said in a statement.

Since the CFTC is a civil body, it cannot file criminal charges against firms. But, the regulatory body can levy hefty fines and other penalties.

Also read: XRP is a Common Enterprise, SEC Argues in Another Desperate Attempt to Corner Ripple.