The CFTC is suing Binance and its CEO, Changpeng Zhao. Zhao’s number ‘4’ response urges everyone to ignore fake news.
The commodities monitor filed a lawsuit in Chicago Federal Court against Binance and Zhao for allegedly violating its rules on derivatives and trading.
The CFTC has complete authority over derivatives transactions in the United States. However, the CFTC cannot require a spot trading platform to register.
In addition, the CFTC alleged that Binance, Zhao, and Lim assisted U.S. clients in circumventing Binance’s geographical restrictions using virtual private networks. It is implied that Binance conceals its ownership and organizational structure using “a web of corporate entities.”
The CFTC asserts that Samuel Lim, a member of Binance’s senior management, conspired with anti-money laundering and Know-Your-Customer personnel to allow criminals to use the platform.
The agency requests that the United States District Court for the Northern District of Illinois prevent Zhao, Lim, and other Binance entities from violating future trading laws. In addition, they must reimburse consumers from whom they profited through violations of the Commodity Exchange Act.
The CEO of Binance, Changpeng Zhao, dismissed the claims as FUD. Senators from the United States have scrutinized Binance for allegedly lax KYC/AML procedures and for concealing the interdependencies between its business units.
Earlier this year, CFTC Chairman Rostin Behnam promised more enforcement actions against crypto companies that violate its regulations.
Since at least 2021, the agency has investigated whether Binance did enough to prevent U.S. customers from trading crypto derivatives.
The agency demanded over $2 billion in restitution and other civil monetary penalties in the fiscal year 2022 alone.
However, in a hearing before the Senate Agricultural and Banking Committee on 1 December 2022, Behnam argued for the necessity of additional consumer protection regulation.
On the other hand, the chair of the CFTC’s sister agency, the U.S. Securities and Exchange Commission, has argued that crypto assets pooled to generate returns from the efforts of others are securities subject to existing U.S. laws. Its enforcement through regulation, as opposed to a rules-based approach, has angered many crypto advocates. Recently, CFTC Commissioner Summer Mersinger urged Congress to require the two organizations.
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