Binance pulls out of Russia due to legal risks!

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Binance pulls out of Russia due to legal risks; House Committee threatens to sue SEC over FTX documents; Bitcoin price holds steady as S&P 500 falls to 110-day low

Binance pulls out of Russia!

Binance has announced that it will completely withdraw from Russia on 27 September 2023, adding that the withdrawal process could take up to a year. Binance, the world’s largest cryptocurrency exchange, is leaving Russia for good as it continues to face legal risks in the country.

In a statement released today, Binance said it has agreed to sell its business in Russia to crypto exchange CommEX. Binance chief compliance officer Noah Perlman said in the statement:

“As we look to the future, we recognise that operating in Russia is not aligned with Binance’s compliance strategy. We remain confident in the long-term growth of the web3 industry globally and will focus our energies on the other 100+ countries in which we operate.”

Binance added that all assets of existing Russian users are safe and that the off-boarding process could take up to a year. Binance said it will work with CommEX to move their assets to CommEX.

Binance’s legal and regulatory issues

Last month, Binance’s peer-to-peer service removed five sanctioned Russian lending apps that previously allowed users to transfer rubles to each other.

The Wall Street Journal reported last month that Binance was helping people in Russia transfer money abroad. According to a Bloomberg report in May, the news follows a US Department of Justice investigation into whether Binance was being used by Russians to evade US sanctions. 

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Binance is currently in the crosshairs of several US regulators. The Commodity Futures Trading Commission first filed a complaint against the company in March. The Securities and Exchange Commission also sued Binance and CEO Changpeng Zhao in June for allegedly violating securities laws.

House Committee threatens to sue SEC over FTX documents

Representative Patrick McHenry, who chairs the US House Financial Services Committee, said that the SEC could be subpoenaed for documents related to former FTX CEO Sam Bankman-Fried.

During a hearing on 27 September, McHenry alleged that SEC Chairman Gary Gensler has not only refused to be transparent with Congress, but has also made efforts to clog the digital asset ecosystem. The committee chairman noted that the government body has made multiple requests for documents relating to the timing of the arrest of the SBF, which was previously scheduled to appear before Congress. 

“Seven months later, the committee has not received a single public document. As I’ve said before, our patience is wearing thin […] I don’t want to be the first committee chairman to subpoena the Securities and Exchange Commission,” McHenry said.

McHenry has requested documents relating to communications between his staff and the Department of Justice regarding the indictment of SBF last February. McHenry repeated his requests in April and May, claiming that the SEC was only providing publicly available information. 

Bitcoin price holds steady as S&P 500 falls to 110-day low

On September 20, the Fed delivered a message that resonated with financial markets. Interest rates are expected to remain at a much higher level than market participants had expected. This comes against a backdrop of stubbornly high inflation and unemployment at record lows.

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As investors grapple with this reality, a new question has emerged: Will the S&P 500 and Bitcoin continue to underperform in the face of tighter monetary policy?

The impact of the Fed’s decision was swift and severe. The S&P 500 index fell to its lowest level in 110 days, signaling growing unease among investors. 

S&P 500 index (blue, right) vs. U.S. 10-year Treasury yield (orange, left)

The 10-year Treasury yield in particular has risen to levels not seen since October 2007. This move reflects the market’s belief that interest rates will continue to rise, or at least that inflation will eventually catch up with the current 4.55% yield. Either way, concerns are growing about the Fed’s ability to maintain these interest rates without destabilizing the economy.

Bitcoin does not necessarily follow traditional markets

In the midst of this financial turmoil, it is worth noting the apparent disconnect between the S&P 500 and crypto, and Bitcoin in particular. Over the past five months, there has been no clear trend in the 30-day correlation between the two assets.

30-day correlation: S&P 500 futures vs. Bitcoin/USD. Source: TradingView

This divergence suggests that Bitcoin is either waiting for a stock market correction or that external factors are at play. Another plausible explanation for this divergence is excitement over the possible introduction of a spot Bitcoin ETF and concerns over regulations hampering the bullish potential of cryptocurrencies. 

As the Fed’s commitment to higher interest rates continues, the financial outlook is entering previously uncharted territory. While some interpret the central bank’s stance as necessary to combat inflationary pressures, others worry that keeping rates high could burden families and businesses, especially when existing loans come due and need to be refinanced at significantly higher rates.

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Binance pulls out of Russia due to legal risks; House Committee threatens to sue SEC over FTX documents; Bitcoin price holds steady as S&P 500 falls to 110-day low