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The U.S. Commodity Futures Trading Commission sued crypto exchange Binance and founder Changpeng Zhao on Monday on allegations the company knowingly offered unregistered crypto derivatives products in the U.S. against federal law. The lawsuit, which was filed in the U.S. District Court for the Northern District of Illinois, alleged that Binance operated a derivatives trading operation in the U.S., offering trades for cryptocurrencies including bitcoin, ether, litecoin (LTC), tether (USDT) and binance USD (BUSD), all of which the suit referred to as commodities. The suit also alleges that the company, under Zhao’s leadership, directed its employees to spoof their locations through the use of virtual private networks.

In a blog post Monday, Zhao said that the lawsuit contained “an incomplete recitation of facts,” saying that “we do not agree with the characterization of many of the issues alleged in the complaint” and calling the complaint “unexpected and disappointing.” Zhao touted the exchange giant’s compliance technology, including its know-your-customer program. He wrote that the exchange had 750 people in its compliance teams, “many with prior law enforcement and regulatory agency backgrounds,” and noted that the company had 16 licenses and registrations worldwide.

Bitcoin sank below $27,000 following news of the lawsuit, dropping to its lowest level since March 17. The world’s largest cryptocurrency by market cap is down 5% in the past 24 hours to about $26,700. Binance coin (BNB) declined by 5%. Matteo Bottacini, a trader at Crypto Finance AG, wrote in a morning note that investors are taking long positions in ether and other altcoins and short positions in bitcoin. “My bias is that upside for BTC looks now limited to the $30Ks while ETH and most of the altcoins are still waiting for the exploit,” he wrote. “Similarly, on the way down, despite BTC being the mega-cap here, I can easily see it trading in the $25k-$22.5k range.”