US CFTC files lawsuit against Binance and CEO
The US Commodity Futures Trading Commission (CFTC) has filed a lawsuit against Binance and its CEO Changpeng Zhao (CZ) alleging “numerous violations” of the Commodity Exchange Act (CEA) and CFTC regulations.
The CFTC says it has charged Binance and CZ with “willful evasion of federal law and operating an illegal digital asset derivatives exchange”.
CFTC chair Rostin Behnam says: “For years, Binance knew they were violating CFTC rules, working actively to both keep the money flowing and avoid compliance.”
The suit alleges Binance’s compliance programme for its commodity derivatives transactions has been “ineffective” and the firm “instructed its employees and customers to circumvent compliance controls in order to maximize corporate profits”.
The CFTC also alleges that Binance did not require customers to provide ID before trading and failed to implement “basic compliance procedures designed to prevent and detect terrorist financing and money laundering”.
Former Binance chief operating officer Samuel Lim has also been charged as part of the lawsuit for allegedly “aiding and abetting Binance’s violations”.
Responding to the allegations, CZ says the “unexpected and disappointing” complaint contains “an incomplete recitation of facts”, with the company set to give a complete response “in due time”.
CZ says Binance has one of the highest standards in know your customer and anti-money laundering, adding: “We are aware of no other company using systems more comprehensive or more effective than Binance.”
He adds that Binance.com “does not trade for profit or ‘manipulate’ the market under any circumstances” and outlines how the firm has a 90 day no-day-trading rule for employees to prevent any employees from actively trading. “We also prohibit our employees from trading in futures,” CZ says.
“We intend to continue to respect and collaborate with US and other regulators around the world,” CZ says.