CFTC Accuses Binance of “Sham” Compliance System
The US Commodity Futures and Trading Commission (CFTC) has accused Binance of intentionally evading the Commodity Exchange Act (CEA) and CFTC regulations.
Binance CEO Changpeng Zhao (CZ) responded to the regulator’s accusations with disappointment, calling for dialogue.
Despite having 16 licenses globally, Binance was criticized by the regulator for having an “intentionally opaque common enterprise” compliance system.
CFTC Complaint Filed Against Binance
Binance, its CEO CZ, former Chief Compliance Officer Samuel Lim, and three other entities under Binance were charged by the CFTC.
The complaint was filed against Binance for “willful evasion of the US Commodity Exchange Act (CEA) and CFTC regulations.”
Binance Coin (BNB) Value Decreases Following Complaint
Following the complaint filed by the CFTC, Binance Coin (BNB) decreased by over 6% in the last 24 hours.
At press time, BNB traded at $309.17 according to CMC.
The current regulatory landscape is witnessing a significant increase in disputes, causing concerns for crypto traders and investors.
CZ sternly replied:
“Upon an initial review, the complaint appears to contain an incomplete recitation of facts, and we do not agree with the characterization of many of the issues alleged in the complaint.”
Binance CEO CZ Responds to CFTC Complaint with Disclosures:
Binance CEO Changpeng Zhao, also known as CZ, recently responded to the US Commodity Futures and Trading Commission's (CFTC) accusations against the trading platform in a blog post. The regulator filed a lawsuit against Binance, claiming that the exchange's compliance system was a "sham" and accusing the company of "willful evasion of the US Commodity Exchange Act (CEA) and CFTC regulations." The complaint named CZ, former Chief Compliance Officer Samuel Lim, and three Binance entities.
In response, CZ disclosed statistics showing Binance's compliance efforts, including handling over 55,000 law enforcement requests and collaborating with US law enforcement to free and seize funds worth over $125 million in 2022 and $160 million to date in 2023. He also noted that Binance has acquired 16 licenses and registrations in global nations so far.
CZ addressed CFTC's claim that Binance chose profits over following US laws, highlighting the "90-day no-day-trading rule" set for all employees. Under this rule, no employee, including the CEO, can initiate a new trade of cryptocurrencies or futures within 90 days of the recent one.
Furthermore, CZ addressed rumors of his owning major accounts on Binance and clarified that he has only two accounts on the platform: one for Binance Card and one for his crypto holdings. He also confirmed that he does not participate in the native Launchpad, Earn, Margin, or Futures due to internal policies.
Despite Binance's compliance efforts, the exchange's native token, Binance Coin (BNB), declined over 6% in the last 24 hours following the CFTC complaint. However, the largest crypto exchange announced the opening of its regional center in Georgia on the same day.
Binance's expansion and crypto adoption mission may face challenges due to the regulatory scrutiny over the established crypto entity. Other crypto exchanges with well-known regulatory compliance protocols, such as Coinbase, have also faced scrutiny from US regulators. Last week, Coinbase received a Wells Notice from the Securities and Exchange Commission (SEC) for violating federal securities laws.
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