The Commodity Futures Trading Commission (CFTC) sued Binance, the world’s largest cryptocurrency exchange, and its CEO Changpeng Zhao on Monday for allegedly breaking trading and derivatives rules.
The derivatives regulator said Binance neglected its responsibility to properly register with the CFTC, according to the filing. The agency has been investigating Binance since at least 2021 over whether it has allowed Americans to trade crypto derivatives, as the CFTC rules typically obligate companies to register if they do.
Binance allegedly guided American customers to avoid compliance measures by using VPNs (virtual private networks) and other methods, according to the filing. The firm also allegedly hid the fact that they had American customers in their internal documents and data.
While Binance.US launched in 2019, Binance.com is illegal for Americans to use, which is why it is only accessible through VPN. Binance.US is more limited than Binance.com, with roughly 150 cryptocurrencies compared to roughly 350 cryptocurrencies.
Binance is based in the Cayman Islands and in December 2022, it experienced mass withdrawals following the FTX cryptocurrency exchange going bankrupt that November. At this time, traders were worried about Binance after an audit of its funds created confusion about the company’s finances, according to The Wall Street Journal. (RELATED: Regulators Crack Down On Crypto Company Audits After FTX Scandal)
Binance Co-Founder and CEO Changpeng Zhao speaks during a press conference at the Europe’s largest tech conference, the Web Summit, in Lisbon on November 2, 2022. – The Web Summit will run until November 4, 2022. (Photo by PATRICIA DE MELO MOREIRA/AFP via Getty Images)
When Binance released its audit, the firm sought to assuage customers about the security of their holding after FTX’s collapse, according to the WSJ.
Since 2018, the crypto giant and its CEO have been under suspicion by federal regulators, according to Reuters, as the exchange soared in popularity for criminals to covertly transfer money.
Binance did not immediately respond to Daily Caller News Foundation’s request for comment.
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