CFTC Sues Binance and CEO After Alleged Regulatory Violations
The world’s largest cryptocurrency exchange by volume, Binance, and its CEO Changpeng Zhao have been sued by the Commodity Futures Trading Commission (CFTC) on charges that they promoted the sale of unregistered derivatives to users in the United States.
Several alleged violations of CFTC regulations are made in the case and include:
- “Offering, entering into, confirming the execution of, or otherwise dealing in, off-exchange commodity futures transactions.”
- “Operating a facility for the trading or processing of swaps without being registered as a swap execution facility (‘SEF’) or designated as a contract market.”
- “Failing to diligently supervise Binance’s activities relating to the conduct that subjects Binance to Commission registration requirements.”
- “Failing to implement an effective customer information program and to otherwise comply with applicable provisions of the Bank Secrecy Act.”
The lawsuit claims that among other infractions, these were concealed by the company’s operations, which were “designed to obscure the ownership, control, and location of the Binance platform.”
The lawsuit claims that unless Binance is held responsible, it is “likely to continue to engage in the acts and practices alleged in this complaint and similar acts and practices.”
Alleged internal Signal messages included in the lawsuit suggest that Binance was aware of its wrongdoings and promoted the behaviors within the platform.
Binance has faced significant regulatory obstacles in 2023. In January, U.S. Senators launched an investigation for illegal activities the company allegedly engaged in.
Additionally, the DOJ acknowledged that it had not yet decided whether to charge Binance and its executives. According to reports, DOJ officials had spoken with Binance’s lawyers about potential plea agreements.