According to the latest article by Wall Street Journal (WSJ), Binance is approaching the verge of failure.
The prominent newspaper is referring to the Kaiko report when reporting on how Binance now handles around half of all transactions involving the direct purchase and sale of cryptocurrencies, down from about 70% at the beginning of the year.
According to WSJ, Binance is facing the threat of enforcement actions from U.S. agencies. Over a dozen senior executives have resigned in the past three months, and the exchange has laid off over 1,500 employees this year to cut costs and prepare for reduced revenue. Despite its significant presence in the crypto world, Binance’s influence is diminishing.
WSJ then explains how there are allegations that the U.S. Justice Department has been engaged in a lengthy investigation that may lead to criminal charges being brought against Binance and its CEO Changpeng (CZ) Zhao as well as fines totaling billions of dollars.
Additionally, Binance is being sued by the Securities and Exchange Commission over claims that it and Zhao misappropriated customer funds while operating unlawfully in the United States. Although the company has admitted to past errors, it insists that consumer money is secure and that it is committed to compliance.
After the article went out, Binance’s CEO immediately took to Twitter to respond.
In a rather unexpected move, CZ Zhao posted an older WSJ article that hailed SBF as a savior in the crypto world. This sparked some reactions within the crypto community, with speculations about financial incentives.
A crypto community member suspected WSJ received $20 million for their article, but CZ Zhao denied any insider information. He also noted SBF’s $42 million support for The Block, a smaller media outlet than WSJ.
The latter, however, isn’t the only article that WSJ wrote in order to mutilate Binance’s business. In July, it went out with the article about how the SEC claimed certain Binance.US crypto trading was deceptive.
In the first hour after Binance launched its U.S. market in 2019, roughly $70,000 worth of Bitcoin was traded. Notably, the demand seemed to originate from Binance itself, according to an internal message reportedly seen by WSJ.
Regulators and investors struggle to gauge the true size of cryptocurrency markets due to challenges in distinguishing genuine trades from asset transfers between exchanges and coin promoters. This issue revolves around the practice known as “wash trading “.
In this procedure, a person exchanges an asset with themself or a partner. As a result, the trades lack economic substance, which might cause prices and trading volume to rise.
Binance then immediately objected to the piece and claimed that the company does not “engage in or tolerate” wash trading.
The representative then said that Binance firmly believes that the SEC’s allegations regarding wash trading are wholly unfounded, and based on a fundamental misunderstanding of the facts and a misapplication of the relevant law.
Also stated by that individual was Binance’s view that the trades in question were “entirely legitimate interactions” involving separate strategies. The representative continued by saying that the number of individual trades did not always affect overall trading.
As the crypto world buzzed with speculation and intrigue, the future of Binance and its potential legal battles remained uncertain, leaving the community eagerly awaiting further developments in this unfolding saga.