Crypto Market Reacts to Binance IRS Investigation by Shedding $150 Billion in an Hour

By Jeff Benson

If you're a long-term cryptocurrency holder, today is one of those days where you shouldn't look at your portfolio.

Crypto markets have taken a drubbing in today's trading, with the total market capitalization (i.e., value) of cryptocurrencies falling by more than 10% in the last 24 hours, according to data from CoinGecko. That’s a loss of over $200 billion to the market. At one point this morning, the market lost roughly $150 billion in an hour, though it has since recovered some $40 billion.

Among the top-10 coins, Dogecoin (-15%), Bitcoin Cash (-15%), and Litecoin (-13%) have been most impacted. Polkadot and Cardano have both managed gains, but Bitcoin, Ethereum, and Binance Coin also experienced double-digit losses. 

Binance Coin may have a harder time getting back on track than its cohort. According to a report today from Bloomberg, Binance Holdings is being investigated by the US Justice Department and Internal Revenue Service as officials look into the use of the exchange by employees and/or customers for money laundering and tax evasion.

Binance has denied any wrongdoing, and the report stresses that "not all inquiries lead to allegations of wrongdoing." Binance has pointed to its anti-money laundering program as a success, while stocking up in recent months on former US politicians and regulators to strengthen regulatory compliance. The firm hired former Senator Max Baucus of Montana in March, and brought on Comptroller of the Currency Brian Brooks to lead its US exchange.

Nonetheless, it's bearish news for the world's top cryptocurrency exchange, which is meant to be off-limits to US users. The company established Binance.US in 2019, but the namesake exchange features just one-tenth of the trading pairs available from Binance—and records an even smaller fraction of its trading volume. Much of today's report focused on concerns that, prior to the creation of Binance.US, Binance had encouraged US-based users to bypass the rules by means of a virtual private network—something Binance denied.

And bad news for Binance is bad news for an industry that was hoping to put yesterday's Tesla debacle behind it. Last night, CEO Elon Musk announced that the electric-car maker was ending its brief flirtation with accepting Bitcoin for Tesla purchases, steering the price of the asset into the red. Bitcoin has now shed 25% of the price from its all-time high of around $64,000, set just last month.

Maybe come back tomorrow.

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