Binance Gets Sued By CFTC For Regulatory Violations

By Kevin • April 2, 2023 7:34 pm • Comments

It looks like another crypto exchange has found itself to be a target by regulatory authorities after it was announced that the CFTC is now suing Binance for regulation violations.

The reason for it is that it accuses the exchange for breaking trading and derivatives rules which is an interesting accusation that other exchanges have not had.

Reportedly, the CEO of Binance himself is also getting sued and the case was brought forth in a federal court located in Chicago.

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At the moment, neither the CEO or Binance has made any public comments about the situation, but it is clear that both will reject the claims.

This is not the first time that Binance has found itself in legal issues with regulatory authorities and investors believe that this will likely continue as the regulatory environment becomes more aggressive against crypto.

CryptoPotato reports:

The United States Commodity and Futures Trading Commission (CFTC) is suing the CEO of the world’s largest cryptocurrency exchange Binance – Changpeng Zhao.

As a result, the BTC price lost over $1400 in minutes.

According to a CNBC report, CZ – the CEO of Binance – is being sued by the CFTC for allegedly violating trading regulations.

The court filing stipulates that the exchange has taken a “calculated approach to solicit US customers in violation of federal regulations.”

CZ and his former compliance officer Samuel Lim have allegedly “actively cultivated lucrative and commercially important VIP customers, including institutional customers, located in the United States.”

To be a little more specific about the accusations, the CFTC accused that Binance had reportedly traded with around 300 “house accounts” that were associated with the CEO.

Additionally, they mentioned that Binance had failed to provide controls that would prevent money laundering and terrorism.

As a result, the CFTC is requesting the court to impose trading and regulation bans in order to address the issues.

It is unknown if the CFTC’s argument will actually hold up in court as it depends on what evidence there is, but Binance maintains the position that they have frozen around $160 million at the direction of law enforcement.

It is clear that each party is only giving their own side of the story so more evidence will be needed to understand the truth.

CNBC concludes:

Lim allegedly advised against outright fraud but encouraged “creative means” to sidestep regulations. Binance “can encourage them to be a non kyc account,” Lim.

KYC stands for know-your-customer, a set of principles that guide anti-money laundering programs for financial institutions and are a key part of fighting terrorist and illicit financing.

“We have made significant investments over the past two years to ensure we do not have US users active on our platform,” a Binance spokesperson said in a statement, calling the complaint “unexpected and disappointing.”

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