SEC Suits Binance & Binance.US Following Asset Freeze
The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Binance, its CEO Changpeng “CZ” Zhao and its related global entity Binance.US on Monday in order to freeze assets on the exchange. The SEC is also seeking to freeze assets on the U.S.-based platform, as well.
BTC, ETH & USDT Trade at Premiums on Binance.US
As a result of this news, major cryptocurrencies such as bitcoin (BTC), ether (ETH) and Tether’s USDT stablecoin have been trading at large premiums on the U.S.-based exchange Binance.US – a sign that investors are exiting the platform due to fear of asset freezing by SEC litigation actions.
Market Depth Decreasing Resulting in Price Anomaly
The price anomaly is attributed to decreasing market depth due to traders retreating from the platform in anticipation of an asset freeze – which could lead them being stuck with their assets if it were to occur. Market makers have been removing liquidity from the order books in light of the SEC’s actions against Binance’s U.S-entity, leading to an almost 6% premium for BTC-USD pair and 7% premium for ETH-USD pair when compared with other exchanges‘ prices according to CoinDesk Bitcoin Price Index (XBX) and Ether Price Index (ETX).
• The SEC has filed a lawsuit against Binance, its CEO Changpeng “CZ” Zhao and its related global entity Binance US alongside seeking asset frozen on the exchange
• Major cryptocurrencies such as BTC, ETH & USDT are trading at large premiums on Binance US due to investors fleeing following SEC actions
• This is attributed to declining market depth due to traders retreating from platform anticipating potential asset freeze
Investors Flee Following SEC Actions
The U.S Securities and Exchange Commission has taken steps towards freezing assets held by crypto exchange giant Binance after filing a lawsuit against both its global entity -Binance US-and CEO Changpeng Zhao last Monday . As result of this news , traders rushed out of the platform pushing major digital currencies like Bitcoin (BTC), Ethereum (ETH),and Tether’s USDT stablecoin up in value beyond what can be seen across other exchanges . Notably , BTC was traded as high as $28800 earlier this Wednesday morning according data , representing approximately $1700 more than what could be seen across other platforms . Similarly ,Ether traded with 7 % premium over CoinDesk Ether Price Index while USDT was priced 8 cents higher than its typical dollar peg .
This price anomaly came about because market makers withdrew liquidity from order books out of fear that any assets they have left behind may be frozen should these legal proceedings turn sour for cryptocurrency exchange giant . Clara Medalie , research director at digital asset data firm Kaiko said : “ No trader wants get caught with their assets stuck an exchange ” .