US DOJ deliberates fraud charges against Binance, but concerns of implications to customers weigh over


  • The US Department of Justice is planning to launch fraud charges against Binance exchange.
  • The prosecutors are concerned, however, about possible blowback to customers akin to what happened with the FTX exchange.
  • Alternative options to punish the alleged crime would be a compromise, with the DOJ deliberating between fines and deferment.

The US Department of Justice (DOJ) is deliberating ways to hold Binance Exchange accountable for alleged fraud charges. However, the authority is at a crossroads as advancement could harm innocent customers. Notably, the dilemma comes as memories of the FTX exchange bank run remain fresh.

Also Read: Breaking: Litecoin completes third halving event, block rewards slashed to 6.25 LTC

US DOJ to prosecute Binance, but a lot is at stake

US DOJ is planning to levy charges against the largest cryptocurrency exchange by trading volume, Binance, citing fraud, adding to the stockpile of charges against the giant exchange and its CEO Changpeng Zhao pushed by the US Securities and Exchange Commission (SEC).

While the federal prosecutors believe in the solidity of their case, they are hesitant as concerns of a run-on lingering. For the layperson, a run-on is a situation where investors withdraw their money from the platform out of fear, leaving the exchange without liquidity. The same was observed when crypto exchange FTX collapsed after Sam Bankman-Fried was called out for commingling customer assets with sister firm Alameda Research.

In the FTX case, customers suffered the brunt of a collapsed exchange, with volumes of money stuck as individual investors and institutions both cited exposure. Similarly, the federal prosecutors fear that by prosecuting Binance they could provoke a run-on against the platform, with many customers likely to suffer financial losses.

Faced with these concerns, the prosecutors are considering alternative options. Sources close to the matter have indicated that Binance could face a “deferred or non-prosecution agreement,” pay a fine, or in the dire case, both, as the DOJ looks to protect customers.

With the prosecution now finding itself at a standstill, the news indicates how exposed customers are, unlike in the traditional banking system, constantly facing the risk of financial losses as exchanges and the authorities tip-toe around each other.

Binance stockpile of charges grows

Meanwhile, Binance exchange and its CEO CZ are also facing the US SEC and the Commodity Futures Trading Commission (CFTC) after the financial regulators charged them for “operating an unregistered exchange in the US and knowingly allowing its citizens to participate in Binance’s offshore exchange.” Other charges include misleading customers and investors through Sigma Chain, a CZ-associated secret market-making firm used to manipulate trades on the exchange’s subsidiary in the US, BinanceUS.

US Senator Elizabeth Warren is also on record criticizing Binance for lying to Congress and calling for the authorities to pursue criminal investigations. An excerpt from her letter to the DOJ reads:

These actions by Binance and Binance.US represent a potential violation of federal law that may subject company officials to fines and imprisonment.

Despite the stretch of these allegations, and cognizant of the potential implication to themselves, the community has somewhat defended Binance while bashing Western media. 

Neither Binance nor the DOJ has given an official statement on the same, but FXStreet will bring updates as they unfold. 

Also Read: Why Litecoin price could crash nearly 50% ahead of third LTC halving event

Litecoin halving FAQs

When is the next Litecoin halving?

Litecoin’s third block halving event is scheduled to take place at a block height of 2,520,000, which is estimated to happen around August 3. The current block height is 2,511,587. The first halving took place in 2015 after the block height was 840,000. The second Litecoin halving event occurred in 2019 when the total block height hit 1,680,000. This event takes place roughly once every four years.

Halving is an important event for both miners and investors. After halving, the block rewards are slashed in half, as the name suggests. The first halving event in 2015 reduced the block reward from 50 to 25 and the second one in 2019 halved it to 12.5. The third halving, which is scheduled on August 3, will further reduce it to 6.25. This means that miners will go from receiving 12.5 LTC for mining a block to 6.25 LTC after the third halving.

After a halving event, the emission of LTCs is cut in half, which effectively triggers a reduction in the Litecoin supply. If the demand remains more or less the same, it creates a negative supply shock. The same dynamics are seen if the demand for LTC increases. Due to the reduced supply and high demand, it would trigger a rally in Litecoin price. But traders often anticipate this trend and try to get an exposure to LTC before the halving, causing a premature rally and a sell-the-news drop on the day of the event.

Following a halving event, miners receive 50% fewer rewards for every block they mine and this creates scarcity in the altcoin, reducing the circulating supply of the asset. The event’s purpose is to control the inflation rate of Litecoin. Halving is therefore a key event that influences the asset’s price and market capitalization over time.

From a technical perspective, it is not any different. But from an investor and miner perspective, there are lot of differences. For example, the concept of halving remains the same for both assets, but due to relatively lower total supply of 21 million and first-mover advantage, Bitcoin’s network effect and large market capitalization as a result has a significant impact on the crypto ecosystem as compared to Litecoin. Additionally, the effect of halving events is more pronounced for Bitcoin, because of the asset’s dominance, hence BTC halving receives more attention.


Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended Content

Editors’ Picks

Litecoin Price Forecast: 40,000 LTC traders exit as crypto crash triggers $500M in liquidations

Litecoin Price Forecast: 40,000 LTC traders exit as crypto crash triggers $500M in liquidations

Litecoin price slid 10% to hit a 7-day low of $102 on Wednesday. On-chain metrics show a large number of LTC holders exiting their positions as hawkish US jobs data sparked downward volatility. 

More Litecoin News
Bitcoin edges below $96,000, wiping over leveraged traders

Bitcoin edges below $96,000, wiping over leveraged traders

Bitcoin's price continues to edge lower, trading below the $96,000 level on Wednesday after declining more than 5% the previous day. The recent price decline has triggered a wave of liquidations across the crypto market, resulting in $694.11 million in total liquidations in the last 24 hours.

More Bitcoin News
DOGE and SHIB traders book profits at the top

DOGE and SHIB traders book profits at the top

Dogecoin and Shiba Inu prices broke below their key support levels on Wednesday after declining more than 9% the previous day. On-chain data provider Santiments Network Realized Profit/Loss indicator shows massive spikes in these dog-theme memecoins, indicating traders realize profits. 

More Cryptocurrencies News
Top 3 Price Prediction Bitcoin, Ethereum, Ripple: Over $560 million in liquidation

Top 3 Price Prediction Bitcoin, Ethereum, Ripple: Over $560 million in liquidation

Bitcoin (BTC) hovers around $97,000 on Wednesday after declining more than 5% the previous day. Ethereum (ETH) and Ripple (XRP) follow in BTC’s footsteps and decline 8.3% and 6.15% respectively. 

More Cryptocurrencies News
Bitcoin: 2025 outlook brightens on expectations of US pro-crypto policy

Bitcoin: 2025 outlook brightens on expectations of US pro-crypto policy

Bitcoin price has surged more than 140% in 2024, reaching the $100K milestone in early December. The rally was driven by the launch of Bitcoin Spot ETFs in January and the reduced supply following the fourth halving event in April.

Read full analysis
Best Forex Brokers with Low Spreads

Best Forex Brokers with Low Spreads

VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.

Read More

BTC

ETH

XRP