scorecardCFTC sues Binance and cofounder Changpeng Zhao for allegedly violating trading rules
  1. Home
  2. investment
  3. news
  4. CFTC sues Binance and cofounder Changpeng Zhao for allegedly violating trading rules

CFTC sues Binance and cofounder Changpeng Zhao for allegedly violating trading rules

Filip De Mott   

CFTC sues Binance and cofounder Changpeng Zhao for allegedly violating trading rules
Investment1 min read
  • Binance and CEO Changpeng Zhao are being sued by the CFTC for allegedly violating trading rules.
  • Among the allegations, the CFTC said Binance solicited US customers without registering under US law.

The Commodities Futures and Trading Commission sued Binance — as well as cofounder and CEO Changpeng Zhao and former Chief Compliance Officer Samuel Lim — for allegedly violating trading rules.

In a complaint filed in federal court Monday, the regulator listed eight provisions of the Commodity Exchange Act that it claims were breached.

Zhao and Lim solicited US customers, especially "lucrative and commercially important 'VIP'" ones, while ignoring requirements to register under US registration law, it said.

Binance further helped customers avoid its own access controls and evade its "ineffective compliance program."

"This filing is unexpected and disappointing as we have been working collaboratively with the CFTC for more than two years," a Binance spokesperson said in a statement, adding that it will continue to work with regulators "to develop a clear, thoughtful regulatory regime."

Binance has also significantly ramped up compliance staff and spent $80 million to help with transaction monitoring, "know your customer" rules, and other compliance programs, the exchange said, pointing to efforts to block US residents.

The CFTC filing is requesting the court to place monetary costs onto the exchange, as well as trading and registration bans.

By not registering with the CFTC, Binance "disregarded federal laws essential to the integrity and vitality of the U.S. financial markets, including laws that require the implementation of controls designed to prevent and detect money laundering and terrorism financing," the complaint said.

The exchange took efforts to obscure its clients and their locations, the CFTC alledged, even keeping the locations of its executive offices private. Binance also directed US customers to hide their location through virtual private networks, and did not require that customers submit proof of identity in order to trade, according to the complaint.

Binance was already facing an investigation from the Justice Department concerning the exchange's compliance with anti-laundering laws.

Meanwhile, Security and Exchange Commission has accused Binance.US of operating an unregistered securities exchange.




Advertisement