The CFTC’s lawsuit details how the company allegedly offered unregistered commodity derivatives to American customers.
The Commodity Futures Trading Commission has sued Binance, the world’s largest cryptocurrency exchange by volume, and its CEO Changpeng Zhao, alleging that the company offered unregistered sales of derivatives to customers in the United States.
The lawsuit alleges several violations of CFTC regulations, including “offering, entering into, confirming the execution of, or dealing in, off-exchange commodity futures transactions,” “operating a facility for trading or processing swaps without being registered as a swap execution facility (“SEF”) or designated as a contract market,” “failed to diligently monitor Binance’s activities in connection with its conduct in compliance with the Commission’s registration requirements,” and “failed to implement an effective customer information program etc. in compliance with applicable provisions of the Bank Secrecy Act .
The violation, among other things, was hidden in the company’s operations, which according to the lawsuit were “designed to disguise the ownership, control, and location of the Binance platform.”
According to the lawsuit, the court must hold Binance accountable, otherwise Binance “is likely to continue to engage in the actions and practices alleged in this complaint and similar actions and practices.”
The lawsuit featured an internal Signal message indicating that the company was aware of its wrongdoing and encouraged the practice on its platform.
2023 already holds big regulatory challenges for Binance; in January, the US Senator launched an investigation into the alleged criminal activity of the platform involved in it. In addition, the DOJ confirmed that it is divided in the decision of whether to charge Binance and its executives, with reports stating that DOJ officials have discussed the possibility of a plea offer. with Binance lawyers.
However, it seems that it is only a matter of time before Binance is charged by some regulatory entity. The SEC has recently stated its position that cryptocurrencies outside of bitcoin are securities, with a recently sent bulletin warning that “those who offer crypto asset investments or services may not comply with applicable laws, including federal securities laws.” In a fitting way, SEC Chairman Gary Gensler is now said again that “investors in the crypto market place their assets at risk in a highly speculative asset class.”
Previously, Gensler commented that “everything else than Bitcoin is a security,” at least quelling the fear that Bitcoin could be looped into the potential regulation to come.