The largest exchange of cryptocurrencies in the world, Binanceis going through a serious moment. The exchange and its CEO, Changpeng Zhaohave been sued by the U.S. Commodity Futures Trading Commission (CFTC).
The agency sued BinanceZhao and a former senior compliance executive for “willful evasion of U.S. law while engaging in a calculated strategy of regulatory arbitrage for commercial gain.”
For the CFTC, Binance Is an “illegal” ball and even “a sham”.
In trouble
U.S. regulators are in the midst of a drastic crackdown against companies of cryptocurrencies.
The vast majority of lawsuits by U.S. prosecutors and investigators have focused on “illegal bidding” and failure to comply with regulations designed to prevent illicit activity. The boom in the midst of the pandemic and the sharp downturn in 2022 have increased the pace of government activity in the sector.
For the CFTC, Binance “offered and executed commodity derivatives transactions on behalf of U.S. persons in violation of U.S. laws” since at least July 20219.
The compliance program of Binance has been “ineffective” and the company, under Zhao’s leadership, told employees and customers to circumvent compliance controls, the CFTC said, citing a series of practices first reported by Reuters in a series of investigations into the exchange last year.
The CFTC also charged the former chief compliance officer with. BinanceSamuel Lim, of “aiding and abetting” the company’s violations.
If regulators prove that executives have encouraged the illegal operation of digital activities for the purpose of benefiting the company’s revenue, Binance will be forced to compensate all affected customers, in addition to suffering a penalty of millions of dollars and obtaining bans on its operations in the United States.
Binance responds
To Changpeng Zhao, the denunciation is “unexpected and disappointing”.
“Upon initial review, the complaint appears to contain an incomplete enumeration of facts, and we disagree with the characterization of many of the matters alleged in the complaint,” said Zhao in a statement.
A spokesman for Binance responded to Reuters That “the company will continue to cooperate with regulators.”
With a holding company based in the Cayman Islands, Binance has never disclosed the location of its headquarters.
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