Crypto News | US regulator sues crypto giant Binance, CEO Changpeng Zhao

The US Commodity Futures Trading Commission charged the world’s biggest crypto exchange and its CEO with ‘willful evasion’ of US law

New York

A top US markets regulator, the Commodity Futures Trading Commission (CFTC), on Monday charged cryptocurrency giant Binance and its founder amd CEO Changpeng Zhao with operating what the regulator alleged were an “illegal” exchange and a “sham” compliance program.

The CFTC sued Binance, Zhao and its former top compliance executive with “willful evasion” of US law, “while engaging in a calculated strategy of regulatory arbitrage to their commercial benefit.”

Rostin Behnam, chairman of the CFTC, said the charges against Binance, the world’s largest crypto exchange, were part of a campaign to “find and stop misconduct in the volatile and risky digital asset market.”

Binance CEO is disappointed

Zhao, a billionaire who was born in China and moved to Canada at the age of 12, called CFTC’s complaint “unexpected and disappointing.”

“Upon an initial review, the complaint appears to contain an incomplete recitation of facts, and we do not agree with the characterization of many of the issues alleged in the complaint,” Zhao said in a statement.

Zhao was often presented as the archrival of crypto tycoon Sam Bankman-Fried, the founder of FTX, who was arrested in the Bahamas in December and faces a US criminal trial later this year.

Meanwhile, a spokesperson for Binance said the firm will continue to “collaborate” with regulators. Binance has made “significant investments” to ensure it does not have US users on its platform, the spokesperson said.

Ineffective compliance program

The CFTC is responsible for oversight of commodities and derivatives markets, including for Bitcoin. Firms such as brokers that facilitate US customers’ trading of such products are required to register with the agency.

Its charge sheet accuses Binance of failing to uphold standards that are required of a company operating as a derivatives market and dealing with major US trading companies.

Since July 2019, “Binance’s compliance program has been ineffective,” the CFTC statement said. At Zhao’s direction, Binance employees and customers were directed to skirt compliance controls “to maximize corporate profits,” the regulator added.

Crypto industry under scrutiny

US media reports have said Binance is under investigation by US federal prosecutors, the Securities and Exchange Commission as well as the Internal Revenue Service,

Regulators are increasingly keen for oversight of a sector which boomed during the Covid pandemic when many people were stuck at home and enticed by the big returns seen by trade in Bitcoin.

The global crypto market stands at more than $1 trillion (€924 billion) and has risen sharply in recent months, although it remains far below its 2021 peak of $3 trillion.

This is an automated news feed of Sacnilk Digital News, not edited by our team.

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