The world’s largest cryptocurrency exchange by trading volume, Binance, & its CEO, Changpeng Zhao, is sued by the U.S. Commodities Futures Trading Commission (CFTC) over allegations of derivative trading rule violations.
The CFTC has filed a lawsuit against Binance, alleging that it allowed U.S. consumers to trade cryptocurrency derivatives without registering with the CFTC and failed to execute necessary anti-money laundering processes. The lawsuit also claims that Binance used various tactics to avoid discovery.
“The defendants’ own emails and chats reflect that Binance’s compliance efforts have been a sham and Binance deliberately chose – over and over – to place profits over following the law,” Gretchen Lowe, chief counsel in the CFTC’s enforcement division, said.
Binance directed customers to set up shell companies in places such as Jersey, the British Virgin Islands and the Netherlands to avoid restrictions, and was aware of the scale of its U.S. business. It has publicly stated that it plans to reach a settlement with US authorities and has resolved compliance gaps.
In a response statement, Zhao Chengpeng, said “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.”
The CFTC’s complaint against Binance comes on the heels of regulatory action taken by several nations, including the U.K., Japan, and Germany, and many U.S. states.
The lawsuit is expected to have ramifications for the cryptocurrency industry, forcing more regulatory scrutiny of other exchanges and prompting other countries to take similar action.
Compiled by Coinbold