Binance, the world’s largest digital currency exchange, has been hit with around 13 civil lawsuits as a result of the ongoing campaign, and after the authority filed a lawsuit against it, over the course of which she said the platform “performs illegal financial transactions and services without obtaining the necessary licenses.”
In the same lawsuit, the authority accused the platform’s founder, Changpeng Zhao, of market manipulation, misuse of customer funds and distortion of trade controls.
At the same time, the United States Securities and Exchange Commission alleged that Coinbase, the nation’s largest cryptocurrency exchange, violated regulations by failing to register as an exchange.
What fate awaits the crypto market in the face of this data? And to what extent can the recent American measures constitute a major pressure factor on the attitudes of dealers in this market?
Binance has lost a quarter of its market share in the past three months as a US watchdog sues it for allegedly violating federal laws. The group, which says it has no head office, controlled 57.5% of the average monthly volume on cryptocurrency exchanges globally at its peak in February. But that’s now down to 43%, according to CCData. The sharp drop came as Binance faced stiffer trading competition and increased scrutiny of its business from US regulators.
great challenges
Analyst and digital currency expert Stephen Abi Shaker says: “Some cryptocurrencies are currently facing great challenges that threaten their continuation”, but at the same time indicates that some of them, such as Bitcoin, will not be affected long term, in his estimation.
And he explains, in statements to “Sky News Arabia Economy”, that the collapse of the FTX platform, along with some failures of other platforms, has placed the sector under greater scrutiny from regulators, especially in light of the pressures on the US banking system. sector after the failure of several banks, and the emergence of platforms as competing investment alternatives.
Cryptocurrencies have started to receive one shock after another in the past year 2022, whether related to the collapses of certain currencies as well as the repeated breaches and even the bankruptcy of “FTX”, after a a prosperous year in 2021, only to gradually lose momentum thereafter. following these repeated shocks, and what affected its performance, in terms of values ​​and trading volumes.
In a related context, Abi Shaker points out that there are global calls to abandon the “petrodollar”, which may make America tougher on the crypto industry due to its competition with the stability of the American currency and its role in the world. economy.
The term “petrodollar”, first coined by an economics professor at Georgetown University in the United States, Ibrahim Aweys, in 1973, refers to the value of oil purchased in US dollars.
The term originated when the Kingdom of Saudi Arabia entered into an agreement in 1974 with the US administration headed by Richard Nixon at the time, to price the first oil exports in US currency.
American pressure
For his part, James Butterville, CoinShare’s research manager for digital currencies, points to another factor in the cryptocurrency crisis, explaining that some digital currency platforms have already relaxed controls and offered various financial products, which has caused the current crisis.
At the same time, however, he stresses the need for US controls commensurate with the nature of the work of digital currency platforms, explaining that Europe has introduced a regulatory model under the name MICA that the United States States should instead consider. of this deal, which he described as “very aggressive”, as he described it.
He explains that countries like Switzerland and Hong Kong are looking to develop custom encryption frameworks, but without platform acumen, adding: “The current campaign in the United States does not mean the end of the encryption industry in America. or world, but it highlights the urgent need for strong regulation to protect investors and preserve market integrity.
He believes that clarity and proper regulations are key to establishing a sustainable path for the crypto industry. In the future, traditional finance will likely play a prominent role in the crypto sector, and regulatory restrictions will shape the crypto industry in ways that replicate the current financial system, with its age-old regulations and institutions. several decades.
After several years of strong growth, many cryptocurrency companies have been forced to take a step back due to the industry downturn over the past year. Tokens such as Bitcoin lost value by around 70%, and many big names fell. The market value of cryptocurrencies has grown from around $2.2 trillion at the start of 2022 to around $800 billion by the end of it, according to data from CoinDesk, as Bitcoin has been the star of this year. terrible decline, as it lost more than 60 percent of its value.
Clear controls
Furthermore, digital currency expert, Tawfiq Al-Rajoleh, describes in statements to “Sky News Arabia Economy” the status of digital currency platforms as “having reached a mature stage in a short period of time, which has made confirm US regulators”. the inevitability that these platforms operate under clear controls.
He adds: The downfall of the “FTX” platform was the hardest blow to the crypto industry, after poor practices that led to its bankruptcy.
Cryptocurrency trading platform FTX was exposed to a severe liquidity crunch, a deficit of up to $8 billion, and its attempts to secure a bailout from industry players failed, ending with a $8 billion filing. balance sheet.
The trading platform crisis was exacerbated by the withdrawal of Binance, the world’s largest cryptocurrency exchange, from its acquisition agreement, which was seen as a lifeline for FTX.
The slide of “FTX” into bankruptcy also led to the downfall of one of the richest cryptocurrency tycoons, Sam Bankman Fried, who resigned as CEO of the company and had lost 94% of his his wealth in one day, dropping from around $15.6 billion to less than $1 billion.
Al-Rejoleh says the campaign in the United States will now end with a clear legal description of what digital currency platforms do, as has happened in Europe since 2016.
Although there are unlikely to be political reasons to clamp down on some of the leaders of these platforms. He points out that digital platforms are the financial future, so there is a need to achieve regulatory laws governing them that prevent manipulations that damage the reputation of cryptocurrencies and digital currencies, he said.
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