A top US regulator’s case against Binance Holdings Ltd. is mushrooming well beyond Changpeng Zhao’s company and rattling American firms that officials say worked with the exchange to trade crypto.
The Commodity Futures Trading Commission’s scrutiny of arrangements that three trading firms had with the exchange has already sent chills across an industry, which relies on US licenses to make markets for securities. The firms weren’t identified in the CFTC’s lawsuit.
The stakes are particularly high for American trading firms because even as many have dabbled in crypto, equities and other more traditional assets remain their bread and butter. A serious regulatory misstep could have repercussions on their broader ability to conduct business.
“The risks to US firms are far greater than the risk to Binance,” said Urska Velikonja, a professor at Georgetown Law. “The big risk to them is the ‘lights out’ risk that they lose their license to operate as broker-dealers in the US.”
Source: Binance Crackdown Threatens US Firms Trading Crypto, Alarming Market – Bloomberg
