CZ, the CEO from Binance in trouble

The US Commodity Futures Trading Commission (CFTC) has charged Binance, the world's largest cryptocurrency exchange, and its founder and CEO Changpeng Zhao with "willful violation of federal laws and operating an illegal digital asset derivatives exchange." The CFTC accuses Binance of "numerous violations of the Commodity Exchange Act and CFTC regulations." In the lawsuit, the CFTC is seeking refunds, civil fines, permanent trading and registration bans, and a ban on further violations of the Commodity Exchange Act and CFTC regulations.

According to the CFTC, Binance, led by Zhao and former chief compliance officer Samuel Lim, operated the trading platform through a deliberately opaque joint venture. This venture would engage in a thoughtful strategy of regulatory arbitrage for commercial advantage. Binance allegedly encouraged US customers to use Virtual Private Networks (VPNs) to hide their location and allowed customers on the platform without proof of identity or location. The company also allegedly urged VIP clients and key employees in the US to open accounts with Binance under the name of newly formed shell companies to evade compliance checks.

In a Twitter thread, Peter Slagter discussed several other claims against Binance, such as:

Binance would potentially trade against its clients and gain an unfair advantage through its "quant desk".
Binance may be violating basic financial rules to increase revenue, despite claims that their compliance program meets all requirements.
Binance might be falsifying data to pass an audit for BUSD (Binance USD) issuance.
Binance allegedly concealed internal communications by moving messages on request from CZ (CEO) to Signal, where the "auto-delete" feature was active.

However, CFTC Commissioner Kristin Johnson noted that Binance has never registered with the CFTC, even though the company is subject to registration and regulation under US law. Johnson also criticized Zhao's claim that Binance is headquartered where he is physically located at any given time, as reflecting a deliberate attempt to limit jurisdiction and evade the application of regulations.

This scandal comes at an extremely unfortunate time and it is still unclear what the consequences of these allegations surrounding the largest central crypto exchange will be for the broader crypto market.

Do you still have crypto at Binance?

Then switch to Knaken quickly and easily and use our transfer service if necessary.

PS. Banner is obviously fake and generated with Midjourney AI.