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Bitcoin falls after CFTC sues crypto exchange Binance for allegedly breaking trading rules

The deteriorating macroeconomic climate and the collapse of industry giants like FTX and Terra have weighed on the price of bitcoin this year.

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Cryptocurrencies fell Monday morning after the CFTC sued Binance, the world’s largest crypto exchange, for allegedly breaking trading rules.

The price of bitcoins slipped 2.5% to $27,142.29, according to Coin Metrics. Ether fell 2.8% to $1,717.71.

In a court filing, the CFTC, or Commodity Futures and Trading Commission, said Binance violated eight provisions of a commodity trading law “designed to prevent and detect money laundering and terrorist financing.” . The lawsuit, which was filed Monday in federal court in Chicago, has the potential to upend stock exchange operations.

Dessislava Aubert, an analyst at crypto data provider Kaiko, said that while bitcoin’s March rally slowed last week, Monday’s decline was largely driven by news about Binance. It is the largest crypto exchange and any US regulatory action against it will have huge implications for the industry,” she said.

The CFTC filing follows a CNBC report about Binance employees working to subvert the exchange’s compliance checks in China, using some of the same techniques the CFTC alleges Binance has to lure US users. .

“Many knew that Binance had a target on its back, but it still bothers some crypto traders,” said Ed Moya, an analyst at Oanda. “Binance’s success is necessary to ensure that much of the cryptoverse can grow.”

Crypto-exposed stocks also suffered from the news. Coinbase and Microstrategy each fell 10%. Miners Marathon Digital, Hut 8 and Riot Platforms lost around 8% each.

The losses were accompanied by a surge in bond yields, which pushed the tech-heavy Nasdaq Composite down 0.6%. Rising rates make future profits, such as those promised by growth-oriented companies, less attractive.

The CFTC’s Binance complaint is the latest chapter in this year’s regulatory crackdown on crypto firms, which has been a major price catalyst for bitcoin and helped steer it away from its previously high correlation with the actions. This correlation is at its lowest level since September 2021.

Monday’s initial decline was the largest for bitcoin since March 22, when the Securities and Exchange Commission issued a Coinbase notice to Wells warning the exchange that it identified potential violations of U.S. securities law.

Cryptocurrencies quickly rebounded from their lows on Monday, although they remained in the red. A similar thing happened on March 22 following bad news from Coinbase.

However, Bitcoin is still on track to cap off a winning month. For the month, it was up 16%, while ether gained 6%. Heading into Monday, analysts had said the March rally may be running out of steam, but a long-term bullish formation has established itself.

—CNBC’s Rohan Goswami contributed reporting


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