The United States Commodity Futures Trading Commission has sued Binance and its CEO and founder Changpeng Zhao on Monday for operating an “illegal” exchange and a “sham” compliance programme, according to the regulator.
The CFTC charged Binance, Zhao, and the company’s former top compliance officer with “willful evasion” of US law, “while engaging in a calculated strategy of regulatory arbitrage to their commercial benefit.”
The regulator’s lawsuit comes as part of a larger and increasingly visible crackdown on cryptocurrency companies.
According to the CFTC’s complaint filed on Monday, Binance “offered and executed commodity derivatives transactions on behalf of US persons” from at least July 2019 to the present.
According to the CFTC, Binance’s compliance programme was “ineffective,” and the company, led by Zhao, instructed employees and customers to circumvent compliance controls.
Binance’s former Chief Compliance Officer Samuel Lim was also accused by the CFTC of “aiding and abetting” Binance’s violations.
Despite the lawsuit being “unexpected and disappointing,” a spokesperson for Binance, which dominates the global digital asset sector, said the company will continue to “collaborate” with regulators.
According to the spokesperson, Binance has made “significant investments” to ensure that there are no US users on its platform.
According to CFTC Chairman Rostin Behnam, Binance executives knew for years that “they were violating CFTC rules, working actively to both keep the money flowing and avoid compliance.”
The CFTC is in charge of overseeing commodity and derivatives markets, including Bitcoin. Firms such as brokers that facilitate the trading of such products by US customers are required to register with the agency.
Binance’s cryptocurrency BNB, the world’s fourth largest by market cap, fell around 4% in response to the news.
Zhao, a billionaire who was born in China and moved to Canada when he was 12 years old, has yet to respond directly to the CFTC’s allegations.
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