US regulator sues CEO of top cryptocurrency exchange Binance | – #regulator #sues #CEO #top #cryptocurrency #exchange #Binance
SummaryCompaniesCFTC accuses Binance of ‘willful evasion’ of federal lawBinance’s compliance was ‘not effective’ under CEO – CFTCFTC cites practices first reported by Reuters last year
March 27 (Reuters) – Binance, the world’s largest cryptocurrency, and its CEO and founder Changpeng Zhao have been sued by the Commodity Futures Trading Commission (CFTC) for operating an “illegal” exchange and a “bogus” compliance program, USA said the regulator. Monday.
The CFTC said Binance, Zhao and his former top compliance executive “engaged in a regulatory arbitrage strategy calculated for their own commercial gain.” USAThey deliberately ignored the commodity laws of .
Binance from at least July 2019 to date in the CFTC complaint USA “Transactions with commodity derivatives on behalf of US persons” in violation of the laws offer did and execution did”.
Binance’s compliance program is “ineffective” and the firm has told employees and customers under Zhao to bypass compliance controls, the CFTC said last year, citing a series of practices first reported by Reuters during a series of investigations into the exchange. .
The CFTC also accused Binance’s former Chief Compliance Officer Samuel Lim of “aiding and abetting” Binance’s violations. Lim did not immediately respond to calls and messages from Reuters.
Binance, which dominates the global digital asset sector, did not immediately respond to requests for comment.
“For years, Binance knew they were violating CFTC rules and actively worked to both keep money flowing and avoid compliance,” CFTC Chairman Rostin Behnam said in a statement. “This should be a warning to everyone in the digital asset world that the CFTC will not tolerate willful evasion of US law.”
The CFTC’s move comes amid a broader crackdown on cryptocurrency companies by US authorities.
Reuters in December of the US Department of Justice 2018reported that it was investigating possible money laundering and sanctions violations at Binance since . According to Reuters reports on Binance, Binance is at least for criminals and companies looking to evade US sanctions 10 billion dollars payment processed.
Binance’s BNB cryptocurrency, the world’s fourth-largest cryptocurrency by market cap, fell nearly 4% on the news. Bitcoin also fell 5.1% on the day following this news 10 fell to a daily minimum of $26,541. 26,900 last time dollars was traded around.
Zhao, a billionaire who was born in China and moved to Canada when he was 12, has yet to directly address the CFTC’s allegations.
In a tweet Monday afternoon, he simply wrote “4” — a reference to his earlier post listing the “Dos and Don’ts” for 2023. The fourth item on the list was “Ignore FUD, fake news, attacks.” an acronym for “fear, uncertainty, and doubt,” often used in cryptocurrency in relation to news perceived as negative.
“PIRATE SHIP”
Founded in Shanghai in 2017, Binance sits at the heart of the global cryptocurrency industry. According to data provider CryptoCompare, its main exchange Binance.com traded around 23 trillion last year dollars carried out trade transactions worth. Zhao said last year that its trade volume will reach $34 trillion in 2021.
With a holding company based in the Cayman Islands, Binance has never disclosed the location of its main exchange. The CFTC charged the holding along with two other Binance divisions.
Binance did not require its customers to provide any identifying information before trading and “failed to implement basic compliance procedures designed to prevent and detect terrorist financing and money laundering,” it said.
The CFTC’s complaint detailed Binance’s efforts to retain US customers even after the company partnered with a purportedly independent American firm to launch a US exchange in 2019 that would serve American clients under US regulations.
Reuters previously reported that this American firm, BAM Trading, is actually controlled by Zhao and is run by Binance as a de facto subsidiary. The CFTC alleged that when Zhao hired BAM’s first CEO, he “described Binance as a pirate ship and explained that he wanted Binance.US to be a navy ship.”
VIP CUSTOMERS
Although Binance’s global business said at the time that it publicly restricted US customers from trading on its platform, the CFTC alleged that Binance provided information to its US-based commercially valuable “VIP customers” on how to avoid its compliance controls.
Lim, then head of compliance, told a subordinate that even customers could use virtual private networks to bypass Binance’s IP address-based compliance controls, adding that “we shouldn’t tell them that.”
The complaint alleges that Zhao withheld information about Binance’s US customer base from some of its senior executives. 2020In October 2018, Zhao asked Binance staff to change the US value to UNKWN for some data fields in Binance’s internal database. substitute ordered to do so, the CFTC alleged.
The complaint alleged that Binance traded on its platform through nearly 300 “house accounts” owned directly or indirectly by Zhao, although the exchange did not disclose this activity in its public terms of use or elsewhere. The CFTC claims that the house accounts from Binance’s “insider trading” policy free was done.
A senior Binance executive told the Wall Street Journal in February that the company expected to pay fines to settle US investigations.
Chief Strategy Officer Patrick Hillman said that Binance is dealing with bribery and corruption, money laundering and economic sanctions. law and was built by software engineers unaware of the regulations, adding that earlier loopholes in its regulatory compliance had been addressed.
Reporting by Tom Wilson in London, Chris Prentice in Washington and Jaiveer Singh Shekhawat in Bengaluru; Edited by Shinjini Ganguly, Alun John, and Marguerita Choy
Our standards: Thomson Reuters Trust Principles.
Angus Berwick
2023-03-27 22:07:28
Source – reuters
Translation“24 HOURS”