Binance, its co-founder and CEO Changpeng Zhao, and its former head compliance officer have all been sued by CFTC for allegedly evading US regulations|Web Summit|CC BY 2.0
The Commodity Futures Trading Commission (CFTC) sued Binance—the world’s biggest crypto exchange—and its CEO and co-founder Changpeng Zhao yesterday for allegedly operating an “illegal” exchange and a fake compliance program.
Zhao, Binance and its former head compliance officer have all been sued for evading US laws “while engaging in a calculated strategy of regulatory arbitrage to their commercial benefit.”
CFTC allegations
-
The CFTC alleges that Binance did not require verifying its customers’ identities before trading and lacked basic compliance procedures set in place to prevent terrorist funding and money laundering.
-
After publicly announcing that American customers will not be allowed to trade on the platform, Binance told its high-value US “VIP” customers ways to dodge compliance controls. According to CFTC, Zhao didn’t share information regarding Binance’s US customer base with some senior executives.
In a statement, Zhao said, “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.”
Crypto crackdown
Crypto companies are facing increased scrutiny from regulators and the industry has seen an increase in lawsuits even though it is spiraling from the after-effects of FTX collapse.
The regulators are cracking down even on celebrities touting digital currencies. Last Wednesday, eight personalities, including Lindsay Lohan, Akon Jake Paul and Soulja Boy, as well as entrepreneur Justin Sun were sued by the Securities and Exchange Commission (SEC) for allegedly violating securities law while pushing crypto.
Sun had sold Tronix and BitTorrent cryptocurrencies.