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US government agencies file a lawsuit against Binance and its CEO

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Federal regulators launched a complaint against Binance, the largest cryptocurrency exchange in the world, and its CEO for allegedly violating US trading restrictions and secretly instructing “VIP” clients on how to circumvent compliance safeguards.

The US Commodities Futures Trading Commission, which regulates derivatives trading, accused the company and its CEO, Changpeng Zhao, of violating US law by offering unregistered crypto derivative products to Americans.

The CFTC issued a statement noting, “Binance’s compliance program has been inadequate, and Zhao has instructed Binance’s staff and clients to bypass compliance processes in order to boost corporate profits.”

The CFTC’s action would bar Binance from registering in the United States and seeks unspecified penalties.

Binance stated in a statement that the lawsuit was “unexpected and disappointing” and that it had made “significant efforts” to prevent US-based investors from using the platform.

After news of the lawsuit circulated on Monday, Zhao tweeted “Ignore FUD, fake news, assaults, etc.” along with the number 4. Fear, uncertainty, and doubt (FUD) is a commonly employed acronym among bitcoin enthusiasts.

Binance helps US VIP customers circumvent trading bans

On Monday, the prices of the two most popular cryptocurrencies, bitcoin and ethereum, fell by more than 3 percent.

The lawsuit is the most recent in a series of regulatory proceedings taken against the cryptocurrency industry, which is still recuperating after a difficult year marked by falling prices for digital assets, a succession of bankruptcies, and the catastrophic collapse of FTX in November.

Since then, Binance has attempted to differentiate itself from the now-defunct exchange created by Sam Bankman-Fried, who has pled not guilty to multiple federal counts of fraud and conspiracy. Binance briefly contemplated rescuing FTX as the cryptocurrency’s price began to spiral, but has subsequently sought to distance itself from the firm.

Binance has long asserted that it is not subject to US law since it lacks a physical headquarters in the country.

The complaint alleges that Binance instructed its staff to assist U.S.-based clients in circumventing trading prohibitions via a messaging app configured to delete text messages automatically.

The CFTC noted that “even after Binance purported to exclude US users from trading on its platform,” Binance advised its clients on how to circumvent Binance’s compliance procedures, particularly its economically valuable US-based VIP customers.

Content Source: edition.cnn.com

About MahKa

MahKa loves exploring the decentralized world. She writes about NFTs, the metaverse, Web3 and similar topics.

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