- Binance faces regulatory challenges in the US with DOJ’s investigation.
- Investor sentiment towards BNB has turned bearish, with negative funding rates and declining trading volumes.
Binance [BNB] has somehow caught the attention of various regulatory bodies in the United States. According to a recent report from Bloomberg, another investigation into the stock market is imminent. This latest development raises the question of whether it is a temporary case of fear, uncertainty and doubt (FUD), or whether there is more to it than meets the eye.
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Binance vs DOJ?
A May 6 Bloomberg report revealed that the US Department of Justice’s national security division was investigating possible misconduct by Binance or its executives regarding sanctions related to the Russian invasion of Ukraine.
In particular, the investigation aimed to determine whether Russians were exploiting Binance Holdings. The alleged exploitation was designed to circumvent US sanctions and facilitate the movement of funds through the platform.
This alleged investigation is the latest in a series of meetings between Binance and regulatory or government authorities.
Will Binance Witness Another Mass Outflow?
At the end of March 2023, the US Commodity Futures Trading Commission (CFTC) took legal action against Binance. It was alleged that the company knowingly offered unregistered cryptocurrency derivatives in violation of federal regulations.
The lawsuit caused a significant outflow of money from the exchange, resulting in a fall in Binance USD’s reserve [BUSD].
In response, Binance introduced TrueUSD [TUSD] as an alternative to the stock exchange, as Paxos, which also faced regulatory oversight (Wells Notice), stopped creating new BUSDs. Given these developments, BNB’s performance following the recent Bloomberg report will provide insight into how investors have reacted.
The current state of BNB
According to data from Mint glass, investors have taken positions against the upward move in the price of BNB. At the time of writing, the funding rate on most exchanges was negative, indicating a prevailing sentiment of bearishness.
Realistic or not, here is the BNB market cap in terms of BTC
However, a closer look at the chart revealed that the current negative funding rate was not isolated, but has been observed consistently over the past few days.
Source: Coinglass
In addition, the trading volume has fallen below the $1 billion mark. The price of BNB is also down more than 1% with the token trading at around $321 at the time of writing.
