In a Latest Development: U.S. Department of Justice Considers Fraud Charges Against Binance
The U.S. Department of Justice (DOJ) is reportedly contemplating the possibility of bringing fraud charges against cryptocurrency exchange Binance [BNB]. Officials at the DoJ are concerned Binance could trigger a situation similar to what FTX experienced in 2022. As a result, they were exploring alternatives such as imposing fines or establishing non-prosecution agreements with Binance, aiming to mitigate potential harm to consumers.
BNB’s Price Movement After Ripple’s Legal Victory
Earlier, BNB’s price rose barely 7% after Ripple [XRP] secured a partial victory in its legal battle with the U.S. Securities and Exchange Commission (SEC) on 13 July. But it hasn’t led to a significant price rally.
The U.S. District Court of the Southern District of New York ruled in its judgment that the sale of Ripple’s XRP tokens on crypto exchanges and through programmatic sales did not constitute investment contracts; hence, it is not a security in this case. But the court also ruled that the institutional sale of the XRP tokens violated federal securities laws.
The crypto industry has lapped up the judgment instantly, generating a price rally across tokens.
Regulatory Scrutiny and Challenges for Binance
Binance has been subjected to relentless regulatory scrutiny in 2023, raising grave concerns about the survival of one of the largest crypto companies in the world. Several Binance executives reportedly exited the firm as the regulatory heat intensified.
Binance was sued by the U.S. Securities and Exchange Commission (SEC) in early June for allegedly breaking federal securities laws.
TradingView data shows a surge in aggregated sell orders of about 125,000 BNB worth $37 million just before the U.S. SEC’s crackdown on the exchange. Speculations are rife around a possible case of insider trading.
The world’s leading crypto exchange is also under regulatory scrutiny across several countries in Europe.
- Germany’s financial regulator has rejected Binance’s request for a crypto custody license.
- The exchange has withdrawn its request for regulatory approval in Austria.
- It has also given up its registration with regulatory bodies in the United Kingdom and Cyprus.
- The exchange has opted to quit the Netherlands after failing to register there.
- Belgium has also ordered the exchange to suspend its operations in the country.
- The French authorities are also reportedly investigating the exchange on “aggravated money laundering” charges.
However, the recent SEC-Ripple court judgment has led many to believe it will have a positive impact on Binance’s case also.
ChatGPT – The AI Sensation
Ever since it burst onto the scene, ChatGPT has become a rage, revolutionizing the way humans interact with AI. People have flooded the AI-powered chatbot with a plethora of use cases to get assistance with literally anything. Right from finding a bug in a code, asking philosophical questions about life, getting dating advice, and even writing full-fledged media articles (not this one though).
Put simply, it functions like a conventional chatbot that we have encountered in the customer support section of different e-commerce companies. However, the big difference here is that communication is more conversational, or to put it in a different way, more human-like.
Well, this is because it is trained using reinforcement learning from human feedback (RLHF). This helps it understand instructions and generate nuanced responses.
But crypto? Binance? Are we stretching the limits of ChatGPT? Let’s see.
Will Binance Move Out of the U.S. Market?
Binance is not new to compliance-related issues in the U.S. In 2019, it ceased operating in the country and launched a separate exchange, Binance.US, its American arm.
The platform’s structure is quite similar to the fallen FTX in the sense that a major part of its administration is being controlled from outside the U.S. Hence, it has always been under the radar of the regulators.
We started to test our AI friend by posing this very sweeping, although controversial, question. Currently, the ability of ChatGPT to express itself is hindered due to the restrictions imposed by the creators. To make it speak its mind, we used the “jailbreak” hack.
ChatGPT speculated that Binance might consider adjusting its operational strategies in the face of a regulatory storm in the U.S. However, the final outcome is shrouded in uncertainty.
On a Growing Number of Hacks on BNB Chain, ChatGPT Says…
Apart from regulatory concerns, the ecosystem’s blockchain, BNB Chain, has gained notoriety over the rising number of decentralized finance (DeFi) hacks of late. As per a report by ImmuneFi, a Web3 bug bounty platform, BNB Chain was the most targeted chain in Q1 2023 with 33 incidents of hacks and exploits.
Here again, we turn to our AI partner to know if hacks will be the undoing of Binance. This time, it seemed as if it was ready to respond to this question promptly.
ChatGPT said hacks were ‘definitely a cause for concern’ and advised the developers to prioritize the issue as it may have a damaging effect not just on the adoption of the BNB Chain but on the value of the BNB coin as well.
Well, ChatGPT asks readers to take its word of caution seriously. To address the security loopholes, BNB Chain soon announced a hard fork which is scheduled to go live on 12 April.
Another thing that caught our attention was the use of BSC rather than BNB in the latest response. Now, it’s a known fact that Binance Chain and Binance Smart Chain are now collectively referred to as one entity – BNB Chain. The update took place in February 2022. However, ChatGPT continued to use BSC Chain.
This is because its knowledge cutoff date is September 2021, meaning that it will base its answers on the information available until this date only.
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