U.S. filing charges against largest crypto exchange Binance

In a civil complaint filed in federal court in the Northern District of Illinois, the Commodities Futures Trading Commission accused Binance and its founder Changpeng Zhao of violating the Commodity Exchange Act and CFTC rules, which govern cryptocurrency derivatives like futures. Officials also charged the former chief compliance officer of the company, Samuel Lim.

Binance called the CFTC’s charges “surprising and disheartening” in a statement to The Washington Post. He noted that the business has collaborated with the organization for over two years. Notwithstanding this, the business stated, “we aim to continue to engage with regulators in the U.S. and worldwide. The best action is to safeguard our users while working with regulators to create an effective regulatory framework.”

Binance has made major investments to prevent American users from using its site. This includes increasing its compliance staff from 100 to 750 and investing in outside compliance support. CoinGecko reports that Binance outperforms its counterparts in terms of trading volumes, even though its offshore exchange is not formally accessible to residents of the U.S.

Because it sells volatile financial products like crypto derivatives, which are often illegal in the US, Binance’s offshore exchange does not function there. For Americans, Binance runs a different exchange with a more limited selection of goods.

Zhao questioned FTX’s stability, leading to its demise and criminal charges against Bankman-Fried

One of the most well-known individuals in the bitcoin industry is Zhao. When Zhao questioned the stability of FTX in November, it sparked a sell-off in the company’s tokens. It set off a series of events that resulted in FTX’s demise and criminal charges against Bankman-Fried. This brought his rivalry with disgraced FTX founder Sam Bankman-Fried to a head.

After FTX’s demise, regulatory pressure on the cryptocurrency market has increased. Do Kwon, a well-known cryptocurrency creator, was detained in Montenegro on Thursday and then charged with fraud in the U.S. The Securities and Exchange Commission filed a complaint against eight celebrities the day before Kwon’s arrest, alleging they failed to declare compensation for the promotions. A U.S.-based cryptocurrency exchange named Kraken agreed to stop selling specific assets and pay a $30 million fine as part of a settlement with the SEC in February.

The CFTC’s legal action from Monday claims that, despite being required to do so, Binance enabled customers to trade on its platform without validating their identities.

Authorities claim that Binance encouraged American users to access its offshore website by directing them to use virtual private networks, or VPNs, which can hide a user’s I.P. address and open up access to websites blocked in their home country. The CFTC claims Zhao was the mastermind behind that “secret operation.” They accused him of ordering staff members to remove any records of helping investors get around the regulations.