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The CFTC has sued Binance and its CEO Changpeng Zhao, or CZ.Ben McShane/Sportsfile for Web Summit via Getty Images

Cryptocurrencies are trading lower after CFTC sued major exchange Binance for regulatory violations.

Bitcoin and Ether are trading around $27,000 and $1,700 respectively, about 3% lower over the past 24 hours.

Binance called CFTC's complaint "unexpected and disappointing."

Two major cryptocurrencies Bitcoin and Ether are trading about 3% lower on Monday, after the Commodities Futures and Trading Commission, or CFTC, sued Binance,its CEO Changpeng Zhao,and former chief compliance officer Samuel Lim, for regulatory violations.

Bitcoin and Ether prices are around $27,000 and $1,700 per token respectively, per CoinMarketCap data. Both cryptocurrencies had hit all-time highs when they surged past $69,000 and $4,800 in November 2021.

The news also spurred ether outflows from Binanceto the tune of hundreds of millions of dollars over 24 hours, CoinDesk reported Tuesday, citing data from Nansen, a blockchain data analytics firm.

The US regulator said in a complaint filed in a Chicago federal court Monday that Binance breached eight provisions of the Commodity Exchange Act.

The CFTC said Binance "lucrative and commercially important 'VIP'" customers, including institutional customers in the US while disregarding registration and regulatory requirements under the US law. The federal agency is requesting the court to order monetary penalties on the exchange, as well as trading and registration bans.

Binance's Zhao wrote in a Monday blog that the CFTC's complaint was "unexpected and disappointing" as the exchange has been "working cooperatively with the CFTC for over two years."

"Upon an initial review, the complaint appears to contain an incomplete recitation of facts, and we do not agree with the characterization of many of the issues alleged in the complaint," he added.

A Binance spokesperson told Insider in an emailed response for comment late Mondaythat the exchange has made "significant investments" over the past two years to ensure it doesn't have active US users on its platform. Measures include ramping up its compliance team by more than seven times and spending an additional $80 million on external partners to support its compliance program.

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Bitcoin and Ether are down 3% after CFTC sued Binance and its CEO over US regulatory violations - Yahoo Finance

Yuri Molchan

News of CFTC suing Binance seems to have little effect on price of XRP

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Crypto influencer David Gokhhstein has noticed that, unlike the rest of the cryptocurrency market, the price of XRP token remains unaffected by the sudden lawsuit of the CFTC regulator against the Binance crypto giant.

Gokhshtein took to his Twitter page to tweet that the whole cryptocurrency market went down on the recent news of the CFTC suing Binance all crypto, that is, except XRP. The price of the sixth largest digital currency has shown a rise of over 4% in the past 24 hours, now trading at $0.4841.

Over the past week, the increase in the XRP price constitutes close to 25%.

Aside from the expectations of Ripple and the XRP community to finally see the judge determine a verdict on the Ripple-SEC case in the first half of this year, the following factors likely impacted the growth: Binance announced that it will soon add an XRP/TUSD pair and the rise of XRP social dominance over other digital currencies. XRP hit the $0.49 level earlier today, regaining this price mark for the first time since early November.

The crash of the FTX exchange spearheaded by former crypto billionaire Sam Bankman-Fried back then pushed the XRP price down, as well as Bitcoin and the rest of the cryptocurrency market.

The event that has pushed Bitcoin and the crypto market down except XRP was the legal complaint of the Commodity Futures Trading Commission (CFTC). The regulator filed the lawsuit against both Binance and its co-founder and chief executive, CZ.

The regulator claims that Binance has been breaking U.S. laws related to derivatives for years and that it should have registered with the CFTC a long time ago. According to Bloomberg, CFTC has referred to Binance's compliance efforts with it as "a sham to place profits over following the law."

To respond to the civil complaint filed by the regulator on Monday, CZ published a blog post. He stated that the complaint seems to contain "an incomplete recitation of facts," and CZ with his legal team "do not agree with the characterization of many of the issues alleged in the complaint."

He tackled just a few issues mentioned in the complaint by the regulator: compliance with U.S. laws and blocking U.S. users, Binance's transparency and cooperation with global law enforcement and regulators, issues related to registrations and licenses of the exchange, and to trading crypto assets and derivatives, in particular.

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David Gokhshtein Highlights XRP Price Resistance as Binance Lawsuit News Spreads - U.Today

Alex Dovbnya

Binance is set to launch six new TUSD trading pairs on March 29 with zero maker fees to entice users, following the replacement of its BUSD stablecoin

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Binance announced today that it will open trading for LDO/TUSD, MATIC/TUSD, OP/TUSD, SOL/TUSD, SSV/TUSD, and XRP/TUSD trading pairs on March 29at 08:00 (UTC).

Users will enjoy zero maker fees on them until further notice. This incentive is expected to encourage more traders to explore and utilize these new trading pairs.

TUSD, which has replaced Binance's BUSD stablecoin, is controlled by controversial entrepreneur Justin Sun, who has just been sued by the SEC.

This move comes after Paxos, the firm behind the BUSD stablecoin, stated on February 21st that it would cease issuing new BUSD tokens due to directives from the New York Department of Financial Services.

In response, Binance has been working to replace the BUSD trading pairs with alternative stablecoins.

The decision was made to ensure that the assets in SAFU continue to protect users in the long term as the market capitalization of BUSD decreases over time.

Binance emphasized that this change will have no impact on users and the funds will continue to be stored in publicly verifiable addresses.

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XRP Gains New TUSD Trading Pair on Binance as Platform Replaces BUSD - U.Today

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According to blockchain analytics firm Nansen, crypto exchange Binance holds over $63.3 billion ($63,350,618,865.88) worth of assets in its publicly disclosed wallets.

A major chunk of this net worth includes $19 billion worth of USDT, $14.5 billion worth of BTC, $7.5 billion worth of ETH, $7.1 billion worth of BUSD and $3.2 billion in BNB.

Other crypto assets account for 18.79% of Binance's net worth or assets.

Nansen, however, clarifies that the assets or net worth mentioned above refers to the value of the token holdings in the wallet addresses provided by the exchange on the blockchains it supports.

Thus, it may not be an exhaustive or comprehensive statement of the actual assets or reserves held by the exchange on behalf of its users or customers.

A glance through the Binance portfolio, as provided by Nansen, indicates that over 86 trillion SHIB sits in various wallet addresses.

The breakdown is given below; for simplicity's sake, the initials of the wallets are being reported.

Wallet "0x5a52" holds 46,926,053,923,695 SHIB worth $484,746,137.03. "0xf977" wallet holds 30,555,635,413,417 valued at $315,639,713. Wallet "0x47ac" holds 7,390,000,000,000 valued at $76,338,700.

Also, the "0x28c6" wallet holds 735,122,523,454 SHIB worth $7,593,815.67. "0xdfd5" wallet holds 288,315,943,377 SHIB worth $2,978,303. Wallet "0x21a3" holds 250,473,529,380 SHIB worth $2,587,391. "0xf977..41acec" wallet holds 200,000,000,000 SHIB valued at $2,066,000.00.

The continuation of the long list goes thus: wallet "0x8894" holds 99,393,937,976 SHIB worth $1,026,739; wallet "0xdccf" holds 15,852,159,335 SHIB valued at $163,752 and wallet "0x9696'' holds 115,149,189 SHIB worth $1,189.

Wallet "0x4976" holds 16,089,143 SHIB worth $166. The "0x161b" wallet holds 11,877,984 SHIB worth $122.

At the time of writing, SHIB was down 1.87% in the last 24 hours to $0.0000103.

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86 Trillion Shiba Inu (SHIB) Held in Binance's Publicly Disclosed Wallets: Details - U.Today

Analysis of exchange stablecoin holdings reveals that Binance, a major player in the crypto ecosystem, is slowly shifting its stablecoin allegiances. Tether USD (USDT) remains the undisputed leader among stablecoins, but things could be about to change in the coming days.

Read more:The lawsuit against Binance highlights cryptocurrency infrastructure risks

Increasingly regulatory oversight has caused the cryptocurrency market to get extremely volatile. The stablecoin ecosystem has, in particular, witnessed the most drastic shift in paradigm after the United States Securities and Exchange Commission (SEC) targeted two major US stablecoin issuers - Paxos issuing Binance USD (BUSD) and Circle issuing USD Coin (USDC).

Since the SECs intervention, the stablecoins market capitalizations have plummeted drastically. Exchanges connected to the aforementioned stablecoins have had to make some changes to the way they operate.

According to data provider Nansen, the top three exchanges based on stablecoin balances include Binance, OKX and ByBit, holding $11.30 billion, $3.64 billion and $0.98 billion, respectively.

Clearly, Binance is the winner in terms of stablecoin holdings, and that is a given, considering the platforms popularity. All the exchanges seem to have USDT as their top stablecoin, again, this is obvious considering that it is the crowd-favorite despite the allegations and lawsuits.

As seen in the chart below, Binance, which currently has $2.45 billion in USDT tokens, is not the top holder of Tether but the Seychelles-based OKX exchange, which has $3.42 billion in its coffers.

Top exchanges tether (USDT) holdings

Looking at the second largest holdings, investors can note that Dai (DAI) is the crowd favorite. Binance is yet again the largest holder of DAI, followed by OKX and ByBit.

The third largest holding is Circles USDC due to its recent run-in with the SEC.

Exchanges stablecoin holdings breakdown

Binance CEO Changepeng CZ Zhao has been accused of many things, including the collapse of the US-based FTX exchange, which was a huge supporter of Tether. Although Binance has not openly supported USDT or its parent companies, it has had massive holdings of the stablecoin due to its popularity.

In September 2022, Binance held nearly $5 billion worth of USDT. But since then, it has reduced its exposure to the stablecoin, instead focussing its efforts instead on promoting BUSD with zero-fee trading.

As Binance extended this program to other trading pairs on July 8, 2022, its market share increased rapidly from 50% to 72%, according to Kaiko research analyst Riyad Carey. However, one of the worlds largest exchanges announced on March 22, 2023, that it would halt the zero-fee trading promotion since the promotion has not helped stem its loss in market share from a peak of 70% to 58%.

There are two reasons why Binances share of USDT has decreased

Heres a comparison of its stablecoin holdings between September 2022 and March 2023.

Binance stablecoin holdings % change

Starting mid-March 2023, Binance has started promoting the utilization of TUSD on its platform via new features like listings, swaps and loans.

The latest announcement from Binance notes the addition of multiple altcoin pairs and also encourages market makers via its zero maker fees policy.

It is highly unlikely that Tether will fall out of the stablecoin race after being at the helm for such a long time. Why? As Binance reduces its USDT holdings, OKX is stepping in to replace Binance. In fact, OKX is the largest centralized exchange holder of USDT.

Apart from the regulatory concern, there is no reason for Binance to completely reject the most popular base pair for cryptocurrency trading. The exchange could reduce the exposure to USDT while it builds up its TUSD coffers, but as mentioned earlier, it will not abandon Tether.

The only scenario in which that would occur is if the regulators nail Tether down in a lawsuit. This could prompt Binance and other exchanges to do the same.

Exchange stablecoin holdings breakdown

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Analyzing exchange stablecoin holdings: Will Tether (USDT) lose relevance as Binance favors True USD (TUSD)? - FXStreet