Back in February, in response to Binance being investigated by authorities in the US, Japan, and the EU, Binance’s CEO, Changpeng “CZ” Zhao, said that the company would work with regulators and regulators would work for Binance. It looks like they’ve taken this statement as a promise to follow through on the promise. In a recent update to its KYC policy, Binance has banned the use of anonymous accounts for trading on their platform.

The decision to request a Romanian court to freeze Binance’s operations in the country was made after the local authorities were contacted by European authorities in the ongoing investigation into the exchange. It is unclear what specifically triggered the local authorities to enact the request; however, the country’s financial regulator is known to be investigating Binance as part of the broader probe into the exchange.

The Cayman Islands’ government has launched an investigation into Binance, a popular cryptocurrency exchange, and is threatening to seize its millions of dollars worth of assets. The move follows a similar one by Japan’s regulators, who are also scrutinizing the exchange. Binance is a Hong Kong based trading platform that was launched in July 2017. Binance employs more than 600 people with offices in Japan, Singapore, Vietnam, China, the US, and the Cayman Islands.

A press release from the Cayman Islands Monetary Authority (CIMA) states that Binance is not registered to operate as a cryptocurrency exchange in the British overseas territory.

The Cayman Islands Monetary Authority (the Authority) wishes to inform the public that Binance, Binance Group and Binance Holdings Limited are not registered, licensed, regulated or authorised by the Authority to operate a cryptocurrency exchange from or in the Cayman Islands.

In recent weeks, a number of other regulators have either issued warnings to Binance or suspended operations in their jurisdictions, as in the case of Ontario.

As a result, rumors of a campaign against the world’s largest cryptocurrency exchange are beginning to spread. But conversations on social media also point to problems with Binance leveraged tokens (BLVTs), which some consider bad financial products.

So one may wonder what is going on with Binance.

Is Binance under attack?

As of last week, a total of four different financial regulators have issued opinions on Binance.

Last Friday, the Financial Services Authority (FSA) issued a warning that Binance continues to operate in Japan without permission.

The Financial Conduct Authority (FCA) issued a similar notice, stating that Binance is not licensed to conduct regulated activities in the UK.

Last week, Binance announced that it had ceased operations in Canada’s most populous province due to increasing regulatory restrictions.

Unfortunately, Binance cannot continue to serve users in Ontario.

Yesterday’s announcement by CIMA only fuels speculation as to why regulators have been so strict with Binance.

Some people think it’s for protectionist anti-cryptocurrency reasons. Others say this is justified because Binance is responsible for managing substandard financial products.

What happens to VLTs?

Binance Leveraged Tokens (BLVT) is a derivative product that provides leverage on the underlying asset. As with cryptocurrency tokens, users can trade BLVT on the Binance platform.

TLBV trading differs from margin trading in that users can use leveraged positions without having to deposit collateral or worry about liquidation. But like cryptocurrency tokens, BLVT can still lose value.

…While you don’t have to worry about liquidation risks, there are still risks associated with leveraged token positions, such as. B. the impact of continuing fluctuations in market prices, trade margins and financing rates.

A look at Litecoin Down BLVT (LTCDOWN) shows that the price of the token moves inversely to the price of Litecoin, as expected by its name.

Image : TradingView.

Cayman Islands joins in global regulatory attacks against Binance, what is happening?

But during the collapse in mid-May, when Litecoin lost 50% of its value, LTCDOWN should have jumped higher. But that didn’t happen; the chart above shows that it lost value along with Litecoin.

Anyone who owned LTCDOWN at that time would have lost money unfairly. According to social media, this seems to be a problem with BLVT in general, not just LTCDOWN.

Binance has since issued a notice of temporary suspension of TLBs, except those related to BTC, ETH, BNB, presumably due to increased liquidity in those markets. There was a warning:

Leveraged tokens are designed for short-term betting on market movements, with a preference for momentum. Long-term ownership of Binance Leveraged Tokens (BLVT) is risky because the token has a built-in expiration date if momentum does not move in the position’s favor.

Are they trying to distance themselves from the regulations as investors prepare for a lawsuit over BLTs?

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