Binance Coin (BNB) is heavily bearish on Tuesday, dropping 10% over the last 24 hours as an already negative market was filed by the US Securities and Exchange Commission’s (SEC) legal action. The regulatory agency sued the largest cryptocurrency exchange in the world and its Chief Executive Officer for allegedly operating a “web of deceptions.”
The latest SEC blow brought BNB price to a multi-month low around $272 as investors sold in panic. The ripple effects were felt across the board with the big crypto dropping to three month lows toward $25,500. Ether is also trending low, losing 3.14% of its value in the last 24 hours.
SEC Sues Binance and CEO Changpeng Zhao
The US SEC filed a lawsuit on Monday against Binance crypto exchange and its CEO Changpeng Zhao, a.k.a CZ, for allegedly violating securities law, claiming that Binance Coin (BNB) and the stablecoin BNB are securities.
The regulator contends that Binance global, its US arm Binance.US and the CEO offered these tokens as unregistered securities to the general public.
At the same time, the company is accused of artificially inflating its trading volumes, diverting customer funds, failing to restrict US customers from its crypto exchange platform and misleading investors about its market surveillance controls.
The SEC said:
“As a second part of Zhao’s and Binance’s plan to shield themselves from US regulation, they consistently claimed to the public that the Binance.com Platform did not serve US persons, while simultaneously concealing their efforts to ensure that the most valuable US customers continued trading on the platform.
The regulator also claims that Binance and its billionaire founder secretly controlled, commingled and diverted billions of dollars of customer funds to a third-party entity owned by CZ “as they please.”
Gary Gensler, SEC chair said:
“We allege that Zhao and Binance entities engaged in an extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law.”
Binance responded to the accusations in a blog post saying:
“While we take the SEC’s allegations seriously, they should not be the subject of an SEC enforcement action, let alone on an emergency basis. We intend to defend our platform vigorously. Unfortunately, the SEC’s refusal to productively engage with us is just another example of the Commission’s misguided and conscious refusal to provide much-needed clarity and guidance to the digital asset industry.
Will The Latest Sell-off Take BNB Price To $200?
The SEC’s lawsuit has sent shockwaves through the cryptocurrency industry and dragged BNB down by as much as 10% within a few hours of the announcement. This sell-off has seen the price breach the $300 psychological level, embraced by the 200-day Simple Moving Average (SMA).
While the $272 swing low is offering some support to the Binance Coin, various indicators indicate the potential for further downward movement.
BNB/USD Daily Chart
Note that a daily candlestick close below the local loss at $272 would initiate intense selling, directing the prices toward the initial support level of $260. Subsequently, the psychological support at $200 may become the subsequent target if the sell-off continued.
Both the Moving Average Convergence Divergence (MACD) Indicator and the Relative Strength Index (RSI) are displaying strong bearish signals. The MACD is moving downward in the negative region and the RSI is valued at 24, in the overbought region, reinforcing the sellers’ grip on the BNB price.
On the upside, the bulls will fight first to regain the $280 level before making a run for the 200-day SMA at $300. If they succeed, they would have abated a deeper decline, setting the coin up for a recovery.
