Binance, the world’s largest cryptocurrency exchange platform, has been accused in the US of operating outside the trading and derivatives laws, by not being registered to provide certain services offered, according to a lawsuit by the Binance Trade Commission. Commodity Futures (CFTC) announced this Monday.
The regulator considers that the company operates an “illegal” exchange as it is not registered to offer derivatives, does not make all efforts against money laundering and does not supervise who operates on its platform, all to make money. The accusations are also directed at Zhao Changpeng, founder and CEO. The investigations date back to 2021.
In the lawsuit filed in federal court in Chicago, the CFTC proposes permanent bans on certain sales transactions, penalties, and refunds. He maintains that Binance and his CEO routinely breached US derivatives rules. He should have registered with the agency years ago and continues to violate CFTC rules.
“Binance deliberately chose, over and over again, to put profits before following the law,” said Gretchen Lowe, senior advisor at the CFTC. Binance says the lawsuit is “unexpected and disappointing,” saying it has been working with Binance for two years. The authorities defend that important investments have been made to guarantee that US citizens do not operate with futures.
But the CFTC doesn’t see it that way. Binance advised US VIP clients to use tools to hide their real location and trade through shell companies rather than in their personal capacity. For these communications with American citizens, channels were used in which the messages are encrypted and deleted, such as Signal.
Thanks to derivatives operations, which he could not carry out in the US, he pocketed some $63 million in commissions in mid-2020, with 16% of the accounts based in the United States.
On the other hand, Binance is also accused of not implementing an effective anti-laundering program or measures to verify the real identity of clients, in addition to the destruction of documents.
