The U.S. Department of Justice is worried that serving crypto exchange Binance with an indictment will cause a run on the exchange similar to the one seen on now-defunct FTX.
According to a report from Semafor on Wednesday, federal prosecutors are considering fraud charges against Binance, but are concerned about the impact the action will have on consumers and crypto markets.
In light of these concerns, people familiar with the matter told the publication that prosecutors are considering other options, including fines and non-prosecution agreements.
The price of Binance’s native exchange token BNB fell 3% immediately after the Semafor report was published, and is currently changing hands for around $240.
Binance is currently in the crosshairs of the U.S. Commodities and Futures Trading Commission (CFTC), which has charged the crypto exchange and its founder Changpeng Zhao with wilfully evading U.S. laws.
The crypto exchange filed a motion to dismiss the lawsuit last week, arguing that the CFTC was reaching beyond the limits of its statutory authority.
Binance is the world’s largest crypto exchange and accounts for the bulk of trading activity across centralized exchanges. Although the exchange’s market share increased after FTX’s collapse in November, it has steadily decreased since the CFTC lawsuit.
Research from Kaiko found that Binance lost 16% of its global market share at the end of the first quarter, which was also partly driven by its decision to end its zero-fee trading program. Meanwhile, the crypto market is still yet to recover from FTX’s implosion, evidenced by significantly lower liquidity in Bitcoin and top altcoin markets.
Despite the recent rally, market depth has failed to recover since the FTX collapse. pic.twitter.com/yyb7UKTWWP
— Kaiko (@KaikoData) July 25, 2023