Getty Images | Ben McShane
The U.S. Commodity Futures Trading Commission (CFTC) yesterday sued Binance, the world’s largest cryptocurrency exchange, accusing Binance and its founder Changpeng Zhao of “deliberately circumventing federal law and committing illegal digital asset derivatives. He was indicted for operating an exchange.”
Binance has committed “numerous violations of the Commodity Exchange Act and CFTC regulations,” Binance said. In a press release announcing the civil enforcement action, the agency said the lawsuit “seeks torts, civil penalties, permanent trade and registration bans, and permanent injunctions for further violations of CEA and CFTC regulations.” There are,” he said.
The CFTC alleges that the defendants operated the trading platform “through a deliberately opaque joint venture directing Zhao as owner and CEO of Binance.” The agency said the defendants “willfully chose to ignore applicable provisions of the CEA while engaging in a calculated strategy of regulatory arbitrage for commercial gain.” Binance’s former chief compliance officer, Samuel Lim, has been charged with facilitating and abetting breaches.
CFTC Chairman Rostin Behnam said: “Binance has known for years to be in violation of CFTC rules and is actively working to maintain the flow of funds and avoid compliance. This should serve as a warning to anyone in the world of digital assets that the CFTC will not tolerate willful circumvention under U.S. law.”
According to a Reuters article, Binance was founded in Shanghai in 2017 but operates with a “holding company based in the Cayman Islands,” with “the location of the core exchange not being disclosed. I charged the company and two other Binance units.”
Binance Calls Complaints ‘Unexpected and Disappointing’
Zhao reportedly said last year that Binance will process $34 trillion worth of transactions in 2021. Binance transactions will total $23 trillion in 2022, Reuters wrote, citing data provider CryptoCompare.
Zhao published a response on Binance’s website, saying the CFTC complaint was “unexpected and disappointing… In an initial review, the complaint appeared to contain an incomplete description of the facts.” , disagrees with the characterization of many of the issues, the complaint alleges.” Binance “is not perfect, but it maintains standards that are often higher than existing regulations require,” he said. is writing
The CFTC’s complaint, filed in the United States District Court for the Northern District of Illinois, states that U.S. law “requires trading of commodity derivatives on exchanges designated or registered by the CFTC, subject to certain exemptions.” The agency said derivatives are “financial instruments that derive value from other things, such as futures, options or swaps, such as benchmark rates, physical commodities such as oil or wheat, or digital assets as in the case of Binance.” said. Commodities such as cryptocurrencies.
Binance is not registered with the CFTC, the agency said. “Zhao, Lim, and other members of Binance’s senior management have failed to adequately oversee Binance’s activities and, in effect, discouraged customers located in the United States from circumventing Binance’s purported compliance controls. It has actively facilitated violations of U.S. law, including assisting and directing violations of U.S. law to prevent and detect violations of U.S. law,” the complaint said.
The CFTC complaint states that Binance “instructed its U.S. customers to hide their location using a virtual private network (VPN),” and that “customers who have not provided proof of identity and location have We have allowed them to continue trading on the platform even after announcing that such conduct is prohibited.” According to the complaint, Binance will open Binance accounts in the name of the newly formed shell company to its VIP customers and “key employees who manage trading decisions, trading algorithms and other assets located in the United States.” I instructed them to circumvent Binance’s compliance controls.”
