• Binance has been accused of breaching US financial rules that require customer money to be kept separate.
  • Allegedly, the exchange commingled billions of dollars of customer funds with company revenue in accounts held at collapsed Silvergate Bank.
  • On Feb. 10, 2021, Binance mixed $20 million from a corporate account with $15 million from an account that received customer money.
  • While Binance has denied the claims, BNB price is dented with the RSI showing a waning buyer momentum.

Binance Coin (BNB) price, which had kick-started a promising recovery rally, has been impeded by a new bearish development in the Binance ecosystem. According to a Reuters report, the largest exchange by trading volume faces charges of breaching US financial rules requiring customer money to be kept separate.

Also Read: Ethereum price inches closer to $1,900 even after losing the daily DeFi battle to Binance

Binance denies claims of commingling customer funds

Binance exchange has denied claims by three anonymous persons who alleged that the exchange commingled billions worth of customer funds in 2020 and 2021. The allegation cites interviews with the three unnamed individuals, with one among them claiming to have first-hand knowledge of Binance group’s finances.

Reportedly, Binance used Silvergate Bank (now defunct) to commingle billions of dollars on a daily basis.  Notably, while there has not been any tangible proof about the allegation, it is not the first time Reuters has released incriminating material about the flagship exchange. In June, the news site said Binance was involved in money laundering and unexplainable financial transfers. Nevertheless, as is the case currently, Binance denied the claims.

Binance’s Chief Communications Officer, Patrick Hillman, has discredited the claims, citing desperation among journalists.

In Hillman’s words:

We’ve been very public about where the company had regulatory shortcomings in the past,” he wrote, “there’s no reason for a respected news outlet like Reuters to continue making stuff up.

Notably, Reuters has been unable to verify the figures or transactional frequency independently. At the same time, they have also not found any evidence Binance lost that supposedly commingled funds. Based on the report, however, the exchange’s stablecoin, Binance USD (BUSD) is also linked to the controversy, with reports saying it was used to credit customers’ accounts when they were really depositing USD.

The threat of commingling customer funds

The commingling of customer funds is indeed a threat to the exchange’s users, considering customers would then have no way of knowing where their funds actually are. According to three former US regulators, it puts the capital and assets at risk. Among the three, former chief of the US Securities and Exchange Commission’s (SEC) enforcement team, John Reed, told Reuters that Binance customers should not need a forensics accountant to track their money.  

Binance Coin rally threatened

The news has had a bearish impact on Binance Coin, presenting a bump on what had been a clear attempt to break above a downtrend line. As selling pressure from the 50- and 100-day Exponential Moving Averages (EMA) continues to weigh down on BNB, Binance Coin price could plummet.

A retrace of the May lows around $301.3 could happen, or in the dire case, Binance Coin price could break below this support level to tag the $283.3 support level before a potential trend reversal.

This bearish outlook draws vigor from the Relative Strength Index (RSI), which was losing positive ground as it eased toward the midline. A crossover into the negative zone would confer authority to the bears. 

BNB/USDT 1-Day Chart

Conversely, if bulls disregard the negative fundamentals and increase their buying pressure, Binance Coin price could break above the downtrend line and confront the 50-day EMA hurdle at $312.9. A decisive flip of this barricade into support could invalidate any bearish claims in the meantime. In a highly bullish case, BNB could rally north to tag the $340.8 resistance level, denoting a 10% ascent from the current position. 


Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Join Telegram

Recommended content


Recommended Content

Editors’ Picks

Convex Finance extends gains after facing short squeeze

Convex Finance extends gains after facing short squeeze

Convex Finance (CVX), the DeFi token, extends its rally to double-digit gains and raises 26% on Monday, as seen on Binance. Data from Coinglass shows large volume liquidation of short positions, to the tune of $722,000. 

More Cryptocurrencies News

XRP stuck below $0.50 while SEC abandons demand for $2 billion penalty

XRP stuck below $0.50 while SEC abandons demand for $2 billion penalty

XRP struggles to make a comeback above sticky resistance at $0.50 on Monday as traders continue to assess the legal skirmishes between blockchain firm Ripple and the US Securities and Exchange Commission (SEC).  

More Ripple News

Quant price poised for a short-term sell-off amid potential early-holder selling spree

Quant price poised for a short-term sell-off amid potential early-holder selling spree

Quant (QNT) price could have a short-term downward pressure. Data from Lookonchain suggests that an early holder has deposited 118,008 QNT tokens worth $9.78 million into the Kraken exchange.

More Cryptocurrencies News

Top 3 Price Prediction Bitcoin, Ethereum, Ripple: Bitcoin retesting its major resistance level

Top 3 Price Prediction Bitcoin, Ethereum, Ripple: Bitcoin retesting its major resistance level

Bitcoin price is retesting its weekly resistance level of $67,147. Ethereum price finds support around $3,321, the price imbalance between $3,146 and $3,498. Ripple price faces rejection due to the key resistance level of $0.499.

More Cryptocurrencies News

Bitcoin: Has BTC found a local price bottom?

Bitcoin: Has BTC found a local price bottom?

Bitcoin (BTC) price looks set for a mild fall this week, weighed by slight outflows in the US spot ETFs and the US Fed keeping a hawkish interest-rate outlook despite easing inflation. Technical indicators suggest that BTC could face a further 5% correction in the short term before resuming the uptrend.

Read full analysis

BTC

ETH

XRP