Introduction to this article:
1. Prediction of event outcome: Binance and SEC reached a compromise, Binance.US operates in compliance, Binance is included in the US regulatory system, and CZ pays a huge fine; 2. It is difficult for SEC and Binance to reach a final result in the short and medium term, and the SEC may guide the encryption market Capital flows back to the United States will continue to release bad news; 3. Tokens associated with high Binance have relatively high short- and medium-term bearish sentiments. 4. Combined with expectations of high interest rates in the second half of the year, the crypto market is expected to usher in a cold winter in June.
Author:CBC LAB
Brief description of background event timeline:
June 5, 2023:
1. Media perspective:
1. Bloomberg: SEC sued Binance and CZ for violating U.S. securities rules;
2. Reuters: Binance executives controlled http://Binance.US bank accounts from 2019 to 2020;
3. CZ’s reply: We have not received any notification of the lawsuit, and our deposits and withdrawals are normally guaranteed to be stable;
2. Data perspective: BNB fell short-term, with a 1-hour drop of 5.06%;
3. Policy perspective:
SOL, ADA, MATIC, FIL, ATOM, SAND, MANA, ALGO, AXS and COTI will be listed as securities by the SEC;
June 6, 2023:
1. Media perspective:
1.Binance.US has had extensive good-faith discussions with the US SEC to reach an agreement and resolve their investigation; 2.Binance: The US SEC’s prosecution aims to unilaterally define the cryptocurrency market structure and will vigorously defend the platform 3.SEC: Binance .US transferred at least US$145 million to entity accounts controlled by CZ and purchased a yacht worth US$11 million; 4.SEC: CZ established BAM trading and management companies to evade US supervision and raised approximately 22 million US dollars from private investors. 5. Binance responds to the SEC: All user assets on the platform are safe, and Binance will actively defend against any false accusations; 6. Binance responds to the full text of the SEC accusation: The platform’s funds are safe, and the SEC’s tough supervision will make the situation more complicated; 7 .Binance.US: The SEC’s lawsuit is baseless and calls on Congress to intervene to establish a feasible regulatory system. 8. Justin Sun issued a document supporting Changpeng Zhao, saying “I believe Binance will prove its innocence”; 9. SEC: Changpeng Zhao established BAM Trading to evade US supervision. , and control its daily financial expenses;
2. Data perspective: BNB and CAKE prices plummeted, with 24-hour declines exceeding 10%;
June 7, 2023:
1. Media perspective:
1. SEC submitted a temporary restraint application to the court to accelerate the freezing of CZ and Binance assets; 2. CoinDesk reported: SEC requested the court to approve the freezing of Binance.US assets, and the latter responded that the platform will continue to operate and deposit and withdrawal functions are open normally; 3. T heBlock: Binance.US has generated US$410 million in revenue and profit of US$225 million since its establishment; 4. Coingraph News reported: The US SEC’s application to freeze Binance.US-related assets was approved by the court; 5. Coinbase CEO: The business relationship between Binance and Coinbase The lawsuits are completely different; 6. Binance issued a “Strong Together” statement; 7. South Korea’s financial regulatory authorities have suspended the acceptance of Gopax’s registration change report involving Binance executives
Brief summary of SEC prosecution document:
SEC takes action against Binance Holdings Ltd., BAM Trading Services Inc.
(hereinafter referred to as the "BAM Transaction"), BAM Management America Holdings Inc.
("BAM Management") and CZ allege that they violated federal securities laws and disregarded investor protections. The defendants are accused of illegally marketing crypto-asset securities to U.S. investors and conducting multiple offers and sales of unregistered crypto-asset securities and other investment programs on Binance.com and Binance.US through unregistered online trading platforms. The defendants allegedly made billions of dollars in profits in this manner while putting investors' assets at significant risk.
To put it simply, the accusations are divided into the following four points: 1. CZ’s trading platforms, securities firms and clearing institutions deliberately circumvented supervision and failed to actively register with the SEC;
2. Binance and BAM Trading illegally engage in unregistered transactions to provide and sell crypto asset securities while hiding invested product information from investors;
3. BAM trading and BAM management conduct insider trading on Binance.US;
4. All the above behaviors occurred when CZ understood the regulatory requirements and actively circumvented regulation, allowing CZ to obtain huge profits;
Summary: On the one hand, the core of the SEC's prosecution is that CZ actively circumvented supervision and made profits and the profits were very high.
Such huge profits that cannot be returned to users will become the key to the dispute between Binance and the SEC over the amount of fines in the future; on the other hand, there is a high probability that the SEC will strengthen its policy formulation on cryptocurrency assets and reach an agreement with Binance in response to this incident;
SEC prosecution case analysis:
Bloom Protocol – $30.9 million;
Reason for prosecution: SEC accused it of conducting ICO of "unregistered securities" Token; amount of fine: US$30.9 million;
Kraken – $30 million;
Reason for prosecution: Suspected of providing unregistered securities to U.S. investors; Amount of fine: US$30 million;
Block.One (EOS) – $24 million;
Reason for prosecution: Allegation of raising billions of dollars in unregistered initial digital currency offerings over nearly a year; Settlement amount: $24 million;
Tezos – $25 million;
Reason for prosecution: The conflict between the founder and the foundation led to the delay of the Tezos mainnet launch, and investors were unable to receive XTZ; amount of fine: US$25 million;
LBRY – $20 million;
Reason for prosecution: LBRY violated securities laws by selling its native LBC Token without registering with the SEC; Amount of fine: US$20 million;
NVIDIA - $5.5 million;
Reason for prosecution: Failure to disclose the impact of crypto mining on the company’s business; Amount fined: $5.5 million;
Kik Interactive (Kin) – $5 million;
Reason for prosecution: Sold digital asset securities to U.S. investors but failed to register the offer and sale in accordance with U.S. securities laws; Amount of fine: $5 million;
Friedman LLP (former audit firm of Tether) – $1 million
Reason for prosecution: "Continuous violations of federal securities laws" and extensive "professional misconduct" Amount fined: $1 million;
EtherDelta – $388,000;
Reason for prosecution: Operating an unregistered digital currency trading platform. Amount fined: US$388,000;
Telegram (TON) – $18.5 million, 1.224 billion returned;
Summary: The final result of the SEC prosecution is basically a fine and settlement, and then compliance with the relevant requirements of the peace talks with the SEC.
Macroeconomic environment:
This article will not conduct a detailed analysis of the global macroeconomics here, but will simply focus on
In terms of the following aspects:
1. Current status of the U.S. debt crisis:
The current total U.S. debt: 31 trillion U.S. dollars; the U.S. government debt ceiling will be suspended before January 1, 2025, to meet government borrowing needs before the November 2024 election;
2. Inflation issue: According to the "Macro Research" released by Dongxing Securities, U.S. inflation is expected to drop to 4% in June 2023;
3. The Federal Reserve’s interest rate hike expectations: the probability of raising interest rates by 25% in June is 29.9%, and the probability of not raising interest rates is 70.1%. At present, there is a high probability of not raising interest rates;
4. U.S. banking crisis: In March 2023, the collapse of Silvergate Bank, Silicon Valley Bank, and Signature Bank in the United States triggered a sharp decline in global bank stock prices. U.S. regulatory agencies responded quickly to prevent potential global contagion.
On March 19, 2023, Credit Suisse was acquired by competitor UBS with the mediation of the Swiss government;
On May 1, 2023, First Republic Bank collapsed and was acquired by JPMorgan Chase. At present, the United States has a total of US$620 billion in floating book losses, which may trigger the next round of banking crisis.
Summary: The current U.S. economy is in a highly turbulent stage, with continued high interest rates. The U.S. banking crisis and high U.S. debt interest rates will lead to U.S. debt defaults and a certain degree of financial crisis. If interest rate cuts are accelerated, the U.S. inflation problem will recur; currently the U.S. most The best solution is to use high interest rates to guide global dollars back to the United States to support the U.S. debt and U.S. banking crisis under high interest rates. A week before the June interest rate meeting, which will not raise interest rates for the first time, launched an attack on Binance, the world's largest cryptocurrency platform, at this time, it is difficult not to think about whether the SEC intends to drive crypto market funds back to the United States.
Summary of the SEC’s lawsuit against Binance:
1. The outcome of the incident is mostly as follows: Binance reaches a compromise with the SEC, Binance.US operates in compliance, Binance is included in the US regulatory system, and CZ pays a huge fine;
2. It is difficult for the SEC and Binance to reach a final result in the short and medium term. At the same time, the SEC may continue to release bad news in order to guide the return of crypto market funds to the United States;
3. Tokens associated with high Binance have higher bearish sentiment in the mid-term;
4. Combined with expectations of high interest rates in the second half of the year, the crypto market is expected to usher in a cold winter ahead of schedule in June. Summary: The current U.S. economy is in a highly turbulent stage, with continued high interest rates. The U.S. banking crisis and high U.S. debt interest rates will lead to U.S. debt defaults and a certain degree of financial crisis. If interest rate cuts are accelerated, the U.S. inflation problem will recur; currently the U.S. most The best solution is to use high interest rates to guide global dollars back to the United States to support the U.S. debt and U.S. banking crisis under high interest rates. A week before the June interest rate meeting, which will not raise interest rates for the first time, launched an attack on Binance, the world's largest cryptocurrency platform, at this time, it is difficult not to think about whether the SEC intends to drive crypto market funds back to the United States.
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