On Monday, the U.S. Commodities Futures Trading Commission (CFTC) sued Binance, the world’s largest crypto exchange, and its CEO and founder Changpeng Zhao for running an “illegal” exchange and a “sham” compliance program.
The CFTC claimed Binance, Zhao, and its former compliance chief “knowingly ignored U.S. commodities law while engaged in a deliberate strategy of regulatory arbitrage to their economic profit.”
The CFTC stated Binance “offered and executed commodities derivatives transactions on behalf of U.S. individuals” from July 2019 until the present, violating U.S. regulations.
The CFTC claimed Binance’s compliance program was “ineffective” and that Zhao ordered workers and clients to evade compliance safeguards, citing Reuters’ investigations into the exchange last year.
The CFTC accused Binance’s former Chief Compliance Officer Samuel Lim of “aiding and abetting” infractions. Lim didn’t answer Reuters’ calls.
Binance, the global digital asset leader, did not reply to requests for comment.
“For years, Binance knew they were breaking CFTC rules, working aggressively to both keep the money flowing and evade compliance,” CFTC Chairman Rostin Behnam stated. This should warn digital asset traders that the CFTC won’t tolerate willful lawbreaking.
The CFTC decision follows a U.S. crackdown on crypto businesses.
Reuters reported in December that the U.S. Justice Department has been investigating Binance since 2018 for money laundering and sanctions breaches. According to Reuters, Binance has processed $10 billion in payments for criminals and organizations evading U.S. sanctions.
On the announcement, Binance’s fourth-largest cryptocurrency, BNB, fell 4%. Bitcoin fell 5.1% to $26,541 on the announcement, a 10-day low. It last traded at $26,900.
Zhao, a millionaire from China who migrated to Canada at 12, has not responded to the CFTC’s charges.
He tweeted “4” on Monday afternoon, referencing his “Do’s and Don’ts” for 2023. “Ignore FUD, fake news, assaults” was the fourth item on the list, referring to “fear, uncertainty, and doubt” in crypto.
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