The US Commodity Futures Trading Commission (CFTC) has filed a lawsuit against Binance, the world’s largest cryptocurrency exchange, and its CEO and founder, Changpeng Zhao, for what the regulator said were violations of trading and derivatives rights.
As stated, the reason for the lawsuit is the deliberate avoidance of US law and the application of a “calculated strategy of regulatory arbitrage” that brought the company a commercial benefit.
Zhao, the Chinese billionaire who owns the crypto exchange, called the CFTC’s lawsuit unexpected and disappointing, Reuters reports.
Zhao said that after an initial review, the complaint appears to contain incomplete facts, and we disagree with how many of the issues raised in the complaint have been characterized.
US prosecutors and civil investigators have been targeting crypto firms for years for illegal offerings and failing to follow the rules to prevent illegal activity. However, their actions toward the crypto industry have intensified in the last few months.
The CFTC alleges in the complaint that from July 2019 until today, Binance offered and executed derivatives transactions for US users violating United States laws.
The compliance program of the Binance platform was “ineffective,” so the company told employees and customers to bypass the compliance check, the CFTC said.
The CFTC also accused the company’s former director of compliance, Samuel Lim, of “aiding and abetting” Binance’s violations.
A spokesperson for Binance said the company would continue to “cooperate” with regulators.
Do Kwon arrested in Montenegro
South Korean authorities have arrested Do Kwon, the fugitive leader of the cryptocurrency network responsible for the $40 billion collapse of terraUSD and Luna tokens in Montenegro. The US Attorney’s Office charged Kwon with fraud.
Earlier this year, US regulators accused Kwon and his company Terraform Labs of “orchestrating a multi-billion-dollar crypto-asset scam,” reports the BBC. South Korean authorities issued an arrest warrant for Kwon in September last year.
According to an indictment released in New York District Court, Kwon faces securities fraud, commodities fraud, and conspiracy charges. They allege to the US financial regulator that Kwon and Singapore-based Terraform Labs failed to convince the public of honest and truthful business practices.