Binance and its Chief Executive Officer, Changpeng Zhao (CZ), have been sued by U.S. Commodities Futures Trading Commission (CFTC), which claims that they broke the rules governing trading and derivatives. On Monday, the CFTC filed the action with the federal court in Chicago.
U.S. CFTC Charges Binance and CEO CZ for Violating Regulations
The CFTC asserts in court documents that the company’s extensive solicitation of and access to customers based in the United States who engage in a variety of digital asset spot and derivative transactions involving commodities that are traded in interstate commerce on the exchange platform has contributed significantly to both Binance‘s reported trading volume and profitability.
An additional charge leveled by the financial watchdog is that the exchange has broken federal laws crucial to the integrity and health of the U.S. financial markets by failing to register with the CFTC in any capacity. These laws include those that demand the execution of measures intended to stop and identify terrorism and money laundering.
CFTC Suspects Intentional Avoiding
In addition to other senior management members of the exchange, Zhao is charged by the CFTC with willfully enabling violations of US law by failing to properly oversee the exchange’s operations. This includes “assisting and instructing customers located in the United States” to get beyond the compliance safeguards that Binance falsely claimed to put in place to stop and catch violations of US law.
“The exchange and its officers, employees, and agents have instructed U.S. customers to use virtual private networks (“VPNs”) to obscure their location; allowed customers that had not submitted proof of their identity and location to continue to trade on the platform.”
CFTC
Also, the regulatory agency has asked the court to impose civil monetary penalties on the exchange and connected parties in addition to corrective ancillary remedy, which may comprise “trading and registration bans, disgorgement, pre, and post-judgment interest,” among other things.
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