Binance CEO Changpeng Zhao has denied allegations of wrongdoing in a lawsuit filed by the U.S. Commodity Futures Trading Commission (CFTC). In a blog post on Tuesday, Zhao wrote that the CFTC complaint “appears to contain an incomplete recitation of facts” and that Binance is committed to transparency and cooperation with regulators and law enforcement around the world.
The CFTC lawsuit alleges that Binance, under Zhao and former chief compliance officer Samuel Lim, violated derivatives rules by allowing U.S. residents to trade financial instruments involving digital assets without holding a license or approval to provide such services in the country. Binance.US, a separate company and platform for U.S. residents, was set up with fewer cryptocurrencies and higher fees.
The CFTC further claims that Binance enabled its U.S. consumers to circumvent compliance measures by hiding their true IP addresses behind a VPN. Yet Zhao insisted that no other firm has more thorough or effective methods than Binance to determine a customer’s location.
The Commodity Futures Trading Commission further alleges that Binance failed to create an adequate anti-money laundering policy and neglected to inform consumers that it was trading in its own markets. The Commodities Futures Trading Commission (CFTC) is requesting financial penalties, prohibitions on trading and registration, and a permanent injunction to prevent any additional breaches of the Commodity Exchange Act and CFTC rules.
The Securities and Exchange Commission (SEC) and other U.S. financial authorities have progressively fined and warned digital asset platforms over activities they believe violate financial rules. Unfortunately, not everyone agrees with these new policies. In February, Hester Peirce, a commissioner at the SEC, said that the agency’s use of enforcement proceedings to clarify the rules in a new business is neither effective nor fair.
A representative for Binance referred reporters to Zhao’s blog post in response to the claims. Zhao said that there are times when Binance conducts trade and that the exchange works with governments and authorities all around the globe. U.S. District Court for the Northern District of Illinois will be hearing this case.
