Binance Labs, Binance's venture capital arm, has declared independence and severed ties with the parent company, signaling a significant shift.

Strategic Shift: Binance Spins Off Binance Labs Amid Regulatory Scrutiny and Lawsuit

Binance, a cryptocurrency exchange, made one of the most notable developments in the crypto market amidst increased regulatory scrutiny and an ongoing lawsuit against the United States Securities and Exchange Commission (SEC). Bloomberg reported on March 15 that Binance quietly spun off its $10 billion venture capital arm, Binance Labs, earlier this year.

After Changpeng "CZ" Zhao stepped down as Binance CEO last year, new CEO Richard Teng's four-month tenure has seen significant developments.

"Binance Labs is an independent venture and not part of the Binance Group, nor is it involved in any of the businesses operated by the Binance Group (including but not limited to the Binance cryptocurrency exchange). Binance Labs is licensed by Binance to use its trademark but otherwise have no other relationship with the Binance Group," as per new terms of use.

In CoinGape reports, according to a spokesperson, Binance Labs has also cut ties with the Binance group. Furthermore, employees at Binance Labs now have separate contracts and systems from those at the Binance crypto exchange, according to the spokesperson. This new move is very similar to the Binance-backed blockchain BNB Chain.

"Our primary goal is to identify projects and invest in them and this has not changed. It's been our focus for the most part since the inception of Binance Labs, which we started as a team in 2018," Binance Labs Investment Director Alex said.

The SEC lawsuit shows no signs of dispute resolution regarding Binance, Binance.US, and CZ's motion to dismiss. The SEC is filing supplemental authority in various lawsuits, including a class action against Binance, to gain control and obtain a court order rejecting the lawsuit's dismissal.

Meanwhile, Judge Amy Berman Jackson recently issued an order prohibiting the Court from considering supplemental authority for discussion or describing the authority for party arguments.

Senators Urge SEC Caution in Crypto ETF Approval, Stoking Market Uncertainty

Senators Jack Reed of Rhode Island and Laphonza Butler of California have written a compelling letter to Gary Gensler, Chairman of the U.S. Securities and Exchange Commission (SEC). In the letter, they urge meticulous scrutiny and caution during the crypto ETF approval process. This has created uncertainty regarding Grayscale, BlackRock, VanEck, and Franklin Templeton's approval of Spot Ethereum ETF applications.

The senators argue for a cautious approach, opposing blanket approval of cryptocurrency ETPs, citing concerns about market integrity and investor protection. They advocate for strict limits on the precedential application of such approvals. Furthermore, they claimed that markets for other cryptocurrencies lack the trading volume and integrity to support ETPs.

The senators emphasized, "Finally, we believe the SEC should strictly limit the precedential application of these approvals." As a result, the likelihood of the SEC approving Spot Ether ETFs in May has decreased significantly. Furthermore, the letter cautioned against the risks of thinly traded cryptocurrencies and those vulnerable to fraudulent schemes.

Senators Urge SEC Caution on Crypto ETPs Amid Market Uncertainty and Regulatory Concerns

The two Senators, Reed and Butler, questioned the suitability of these assets for ETPs, citing potential risks to retail investors. They emphasized the SEC's discretion in approving such products and urged caution in the face of increased risks. The letter ended, "Retail investors would face enormous risks from ETPs referencing thinly traded cryptocurrencies or cryptocurrencies whose prices are especially susceptible to pump-and-dump or other fraudulent schemes."

Previously, Bloomberg ETF expert Eric Balchunas reduced the likelihood of a Spot Ethereum ETF approval in May from 60-70% to 30 percent. This drop in optimism coincided with market dissatisfaction with how the SEC handled Ethereum ETF applications.

Furthermore, the SEC's lack of engagement and silence on the issue have convinced the market of its eventual decision. As a result, if the regulator agency decides to follow the senators' request, it may reject Spot Ethereum ETF applications from major players such as BlackRock, Grayscale, and others. In addition, XRP, SHIB, and TRX ETFs may be ruled out.

Photo: Microsoft Bing