Why did the CTFC sue Binance and Zhao? A closer look at the controversial market case
The previous day’s complaint by the United States Commodity Futures Trading Commission against the world’s largest exchange, alleging widespread violations of the rules, caused the price of Bitcoin to fall below $27,000 and a 2.5% decrease in the value of the entire digital currency market. In the following, we will briefly examine the charges raised by this commission against Binance and its CEO Chang Peng Zhao.
Binance violations
To Report Crepito Potito According to a complaint filed with the U.S. Commodity Futures Trading Commission, Binance has facilitated the trading of several cryptocurrencies for its customers in the U.S., which the regulatory body considers “commodities.”
According to this commission, Bitcoin, Ethereum and Litecoin are considered goods. Of course, while there is broad agreement among regulators and parliament that Bitcoin is a commodity, the Securities and Exchange Commission has declared on multiple occasions that Ethereum is a “security.”
The Commodity Futures Trading Commission claims that Binance was not supposed to serve US customers except through a separate and independent company, Binance US (Binance.us); However, the group’s activities within the United States, especially for important institutional clients, have gradually expanded over time.
According to the commission, despite the exchange and Changpeng Zhao knowing that this would create regulatory requirements for Binance, they ignored them and helped customers circumvent regulatory processes.
This commission says that ignoring such laws allowed Binance to earn $1.14 billion from derivative transactions in May 2021 (May 1400) alone. At the same time, US-based customers accounted for about 16% of Binance accounts.
The Commission has also accused Binance of using various techniques to evade regulatory requirements; including the non-establishment of a fixed central office with the aim that Binance is not subject to the laws of the region.
Escaping authentication monitoring
In addition, according to the Commodity Futures Trading Commission, Binance and its employees encouraged US customers to use VPNs to bypass the authentication process, which is against the law. The exchange had also set up accounts with shell companies for its key customers in the United States to evade regulatory oversight.
Finally, the Futures Trading Commission has accused Binance of disregarding laws that prevent illegal financing.
This agency wrote in its complaint:
Binance has never been registered with the Commodity Futures Trading Commission and has ignored federal laws that are necessary to maintain the integrity and viability of the US financial markets; Among the laws designed to prevent and detect money laundering and terrorist financing.
In its complaint against Binance, this commission is generally looking for rulings, including the prohibition of transactions and registration, damages from illegal income and fines.
According to CNBC, Binance has also helped Chinese customers use its platform while effectively escaping authentication and anti-money laundering laws and despite cryptocurrencies being banned entirely in China.
Chang Peng Zhao, the CEO of Binance, pointed to his famous number “4” in response to the complaint of the Commodity Futures Trading Commission and the accusations on Twitter; A sign of Binance’s quadruple goals, by which it avoids commenting on what it deems to be “fake news” and “attacks against Binance.”