Today, the US Commodity and Futures Trading Commission (CFTC) filed a lawsuit against crypto exchange Binance and its CEO, Changpeng “CZ” Zhao. The regulator has accused executives and companies of allegedly violating the country’s trading rules.
In an official blog post, Zhao responded to the complaint and classified it as “unexpected” and “disappointing.” The executive claimed that the company has been working with US regulators since 2021. Zhao said:
(…) the complaint appears to contain incomplete facts, and we disagree with the characterization of many of the issues alleged in the complaint.
Binance CEO Eating Corporate “Dog Food”?
Zhao dismissed those charges, including Binance’s capacity to enforce compliance with US trading rules. The CEO of the crypto exchange claimed that the platform has implemented a mandatory Know Your Customer (KYC) program and Anti-Money Laundering rules for all customers.
Furthermore, Zhao claimed that Binance has the technological ability to “block” US users from accessing the international platform. In it, users can trade crypto options and futures contracts with leverage.
In that sense, the statement denies that Binance uses the platform to trade against its customers. It only allows certain institutional partners to provide liquidity in some “less liquid pairs” for a “small profit.” Zhao himself denied that he profited from trading on crypto exchanges:
Personally, I have two accounts on Binance: one for Binance Card, one for crypto holdings. I eat my own dog food and store crypto on Binance.com. I also need to convert crypto from time to time to pay personal expenses or for Card.
The crypto exchange said it has implemented additional restrictions to prevent employees from manipulating or taking profits on tokens and other newly listed products. Information about listings, launchpads, and privilege data is kept under a “strict no-one policy.”
Binance Has Suffered From CFTC Actions
Zhao also said that crypto exchanges are cooperating with law enforcement agencies to prevent illegal activities on their platforms. As a result, the agency has been able to freeze more than $125 million in funds from compliance and enforcement actions in 2022 and $160 million in 2023.
Although he uses the exchange for his personal life, Zhao denies that he benefits from the financial product:
(…) also never participated in Binance Launchpad, Earn, Margin, or Futures. I know the best use of my time is building a solid platform that serves our users. At Binance, we look for great solutions to all problems. We collaborate with regulators and government agencies around the world.
As Bitcoinist reported earlier today, the CFTC’s actions are allegedly trying to “protect” US customers by limiting access to the “volatile and risky digital asset market.” It remains to be seen if the legal action will have a lasting impact on Binance’s commercial activities.
Binance net outflows have started
-$307m in 24 hours
-$145m last 1 hourWill be watching this over the next few days.
This is not surprising, as there is no point in keeping the risk as it was last week. Will see if this causes panic when Asia wakes up pic.twitter.com/1AJQL6PXx4
— Evanss6.eth (@Evan_ss6) March 27, 2023
Charts from Tradingview