A U.S. federal court has approved the settlement between Binance and the Commodities Future and Trading Commission (CFTC), which will see Binance pay $2.7 billion in penalties. Meanwhile, Lido DAO is the center of a class-action lawsuit claiming the it duped the public into investing in an unregistered securities offering,and spot Bitcoin (BTC) exchange-traded funds (ETFs) could trigger unwanted consequences for crypto exchanges like Coinbase.
US court nods settlement against Binance, firm to pay $2.7B to CFTC
A United States court has entered an order against crypto exchange Binance and its former CEO, Changpeng “CZ” Zhao, that will see Binance pay $2.7 billion and CZ pay $150 million to the Commodity Futures Trading Commission (CFTC).
In a Dec. 18 statement, the CFTC announced that the U.S. District Court for the Northern District of Illinois had approved the previously announced settlement and concluded the enforcement action first issued by the CFTC in November.
Federal Court Enters Order Against Binance and Former CEO, Zhao, Concluding CFTC Enforcement Action: https://t.co/YJD1lglbsZ
— CFTC (@CFTC) December 18, 2023
“The court finds Zhao and Binance violated the Commodity Exchange Act (CEA) and CFTC regulations, imposes a $150 million civil monetary penalty personally against Zhao, and requires Binance to disgorge $1.35 billion of ill-gotten transaction fees and pay a $1.35 billion penalty to the CFTC,” wrote the CFTC in a statement.
The approved settlement marks the conclusion of a long-running case against CZ and Binance by the CFTC. The agency sued the executive and his exchange on March 27 for evading federal law and operating an illegal derivatives exchange.
Class action lawsuit against Lido DAO filed in California
A former LDO investor has filed a class-action lawsuit against the Lido DAO over allegations that it operates an unregistered security and is liable for plaintiffs’ losses during crypto winter.
The lawsuit, filed in a San Francisco District Court on Dec. 17, blames Lido DAO for dumping tokens on unsuspecting investors during the depths of the bear market. Per the filing, Lido DAO began as a “general partnership” comprised of institutional investors, before deciding to capitalize on a “potential ‘exit’ opportunity” by selling LDO tokens to the public.
The filing backs up its claim of LDO being an unregistered security by channeling comments from Securities and Exchange Commission Chair Gary Gensler. Per the filing, the LDO is controlled by “a group in the middle […] and the public is anticipating profits based on that group.”
Lido has more than $19 billion worth of crypto locked in its contracts, making it the largest liquid staking derivative platform on the market, according to DefiLlama.
Spot Bitcoin ETF will be “bloodbath” for crypto exchanges, analyst says
While the crypto community eagerly awaits the possible approval of a spot Bitcoin ETF in the United States, some analysts are warning it could trigger unwanted consequences for cryptocurrency exchanges.
Several industry observers have predicted that a spot BTC ETF could start trading in early 2024, an event that, when paired with Bitcoin’s upcoming block reward halving expected in April, Blockstream CEO Adam Back believes could propel BTC to $100,000.
Bitcoin proponents such as Jan3 CEO Samson Mow have said that approval of a spot Bitcoin ETF in the U.S. could even drive Bitcoin as high as $1 million in the “days to weeks” following.
However, the forecast isn’t that optimistic for centralized cryptocurrency exchanges, according to ETF Store president Nate Geraci and Bloomberg ETF analyst Eric Balchunas.
Once approved, a potential spot Bitcoin ETF in the U.S. would be a “bloodbath” for cryptocurrency exchanges, Geraci wrote on X (formerly Twitter) on Dec. 17.
Gonna be a bloodbath for crypto exchanges…
— Nate Geraci (@NateGeraci) December 18, 2023
According to Geraci, retail spot Bitcoin ETF buyers and sellers will benefit from underlying institutional trade execution and commissions. On the other hand, retail users of crypto exchanges will get “retail trade execution and commissions,” Geraci noted, stressing that those will need to improve to compete with a spot Bitcoin ETF.
Bloomberg ETF analyst Eric Balchunas emphasized that a spot Bitcoin ETF will cost 0.01% to trade, the average fee for ETF trading.
In contrast, trading costs on exchanges like Coinbase reach 0.6%, depending on the cryptocurrency, transaction size and trading pairs.
Once approved, a spot Bitcoin ETF will create more price competition in the crypto industry, bringing money back to investors from exchanges that spend massive amounts of cash to advertise their services at events like the Super Bowl, Balchunas believes.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
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