The CFTC sued cryptocurrency exchange Binance and Changpeng Zhao, its CEO, for “numerous violations of the Commodity Exchange Act (CEA) and CFTC regulations. The US derivatives market regulator also accused Binance of operating an illegal asset derivatives exchange.” digital.
The agency disclosed this on Monday, noting that it had filed the charges in a district court in Illinois. According to the regulator, Binance acted as a “defined contract market or swap execution facility” by processing derivatives transactions without recording them.
The CFTC today accused Binance and its founder, Changpeng Zhao, of willfully evading federal law and operating an illegal digital asset derivatives exchange. Learn more: https://t.co/DdczFgvW6A
– CFTC (CFTC) March 27, 2023
The agency said it also charged Binance Holdings Limited, Binance Holdings (IE) Limited, and Binance (Services) Holdings Limited. These and other entities were deployed by Zhao to operate the trading platform via a “deliberately opaque joint venture.”
The CFTC has been investigating Binance since at least 2021, when insiders reported. bloomberg The derivatives regulator has been investigating a leading cryptocurrency exchange seeking to determine whether the exchange allows US citizens to trade derivatives without being registered.
In the complaint, the CFTC alleged that as of July 2019, after Binance barred US clients from trading on its platform, it had in fact instructed them on the best ways to evade its compliance controls. The CFTC said the operation specifically targeted the exchange’s “U.S. high-profile VIP clients” of the exchange.
Moreover, for a significant period of time since July 2019, Binance has failed to verify the identity of its customers. In addition, the exchange failed to implement basic compliance measures designed to prevent and detect terrorist financing and money laundering.
The CFTC appears to have some internal chat history, and it doesn’t look great on paper
Like come on. They are here for crime.”
“We see the bad, but we close our eyes.” pic.twitter.com/SvK7hdwSnp– dB (@tier10k) March 27, 2023
In its complaint, the CFTC also accused Binance of instructing its employees to discuss evading control with US-based clients using a messaging app that automatically deletes chats. The CFTC alleged that this was done to erase evidence of the exchange’s efforts to retain its customers in the country.
“The defendant’s willful evasion of US law is at the core of the committee’s complaint against Binance,” noted Gretchen Lowe, CFTC Deputy Director of Enforcement and Lead Counsel.
“The defendants’ emails and conversations reflect that Binance’s compliance efforts were a sham and that Binance deliberately chose — time and time again — to maximize profits over following the law,” Lowe added.
The CFTC slams the fees of former Binance CEO Samuel Lim
Meanwhile, the CFTC said it had also charged former Chief Compliance Officer (CCO) of Binance Samuel Lim with aiding and abetting cryptocurrency exchange violations between 2018 and 2022. The regulator said the former CCO engaged in activities to help clients defraud. On Binance’s compliance controls.
For example, Lim promoted a policy that “instructed US-based Binance clients to access the trading facility through a Virtual Private Network to avoid IP-address-based controls at Binance or create ‘new’ accounts through offshore shell companies to evade KYC-based controls in Binance CFTC clarified.
“For years, Binance has been known to flout CFTC rules, actively working to keep funds flowing and avoid compliance. This should be a warning to anyone in the digital asset world that CFTC will not tolerate willful avoidance of US law,” explained CFTC President Rustin Behnam. .
1/ CFTC sues Binance & CZ
In its complaint, the CFTC reiterates its position that Bitcoin and Ethereum are commodities and
Declare that Tether, BUSD, and LTC are commodities!
The CFTC has officially taken the challenge to the Securities and Exchange Commission (SEC) and the “everything safe” crowd.
– MetaLawMan (MetaLawMan) March 27, 2023
Binance and the SEC
The CFTC action against Binance comes days after Coinbase, the largest US cryptocurrency exchange, revealed that it had received a notice from Wells from the US Securities and Exchange Commission (SEC), indicating possible regulatory action.
Reports also surfaced last year that the SEC was investigating the relationship between Binance’s US arm and two market makers and its affiliates, Sigma Chain AG and Merit Peak Limited. The SEC has also over the years taken action against crypto companies for their crypto offerings classifying them as unregistered securities.
The CFTC sued cryptocurrency exchange Binance and Changpeng Zhao, its CEO, for “numerous violations of the Commodity Exchange Act (CEA) and CFTC regulations. The US derivatives market regulator also accused Binance of operating an illegal asset derivatives exchange.” digital.
The agency disclosed this on Monday, noting that it had filed the charges in a district court in Illinois. According to the regulator, Binance acted as a “defined contract market or swap execution facility” by processing derivatives transactions without recording them.
The CFTC today accused Binance and its founder, Changpeng Zhao, of willfully evading federal law and operating an illegal digital asset derivatives exchange. Learn more: https://t.co/DdczFgvW6A
– CFTC (CFTC) March 27, 2023
The agency said it also charged Binance Holdings Limited, Binance Holdings (IE) Limited, and Binance (Services) Holdings Limited. These and other entities were deployed by Zhao to operate the trading platform via a “deliberately opaque joint venture.”
The CFTC has been investigating Binance since at least 2021, when insiders reported. bloomberg The derivatives regulator has been investigating a leading cryptocurrency exchange seeking to determine whether the exchange allows US citizens to trade derivatives without being registered.
In the complaint, the CFTC alleged that as of July 2019, after Binance barred US clients from trading on its platform, it had in fact instructed them on the best ways to evade its compliance controls. The CFTC said the operation specifically targeted the exchange’s “U.S. high-profile VIP clients” of the exchange.
Moreover, for a significant period of time since July 2019, Binance has failed to verify the identity of its customers. In addition, the exchange failed to implement basic compliance measures designed to prevent and detect terrorist financing and money laundering.
The CFTC appears to have some internal chat history, and it doesn’t look great on paper
Like come on. They are here for crime.”
“We see the bad, but we close our eyes.” pic.twitter.com/SvK7hdwSnp– dB (@tier10k) March 27, 2023
In its complaint, the CFTC also accused Binance of instructing its employees to discuss evading control with US-based clients using a messaging app that automatically deletes chats. The CFTC alleged that this was done to erase evidence of the exchange’s efforts to retain its customers in the country.
“The defendant’s willful evasion of US law is at the core of the committee’s complaint against Binance,” noted Gretchen Lowe, CFTC Deputy Director of Enforcement and Lead Counsel.
“The defendants’ emails and conversations reflect that Binance’s compliance efforts were a sham and that Binance deliberately chose — time and time again — to maximize profits over following the law,” Lowe added.
The CFTC slams the fees of former Binance CEO Samuel Lim
Meanwhile, the CFTC said it had also charged former Chief Compliance Officer (CCO) of Binance Samuel Lim with aiding and abetting cryptocurrency exchange violations between 2018 and 2022. The regulator said the former CCO engaged in activities to help clients defraud. On Binance’s compliance controls.
For example, Lim promoted a policy that “instructed US-based Binance clients to access the trading facility through a Virtual Private Network to avoid IP-address-based controls at Binance or create ‘new’ accounts through offshore shell companies to evade KYC-based controls in Binance CFTC clarified.
“For years, Binance has been known to flout CFTC rules, actively working to keep funds flowing and avoid compliance. This should be a warning to anyone in the digital asset world that CFTC will not tolerate willful avoidance of US law,” explained CFTC President Rustin Behnam. .
1/ CFTC sues Binance & CZ
In its complaint, the CFTC reiterates its position that Bitcoin and Ethereum are commodities and
Declare that Tether, BUSD, and LTC are commodities!
The CFTC has officially taken the challenge to the Securities and Exchange Commission (SEC) and the “everything safe” crowd.
– MetaLawMan (MetaLawMan) March 27, 2023
Binance and the SEC
The CFTC action against Binance comes days after Coinbase, the largest US cryptocurrency exchange, revealed that it had received a notice from Wells from the US Securities and Exchange Commission (SEC), indicating possible regulatory action.
Reports also surfaced last year that the SEC was investigating the relationship between Binance’s US arm and two market makers and its affiliates, Sigma Chain AG and Merit Peak Limited. The SEC has also over the years taken action against crypto companies for their crypto offerings classifying them as unregistered securities.