The U.S. Commodity Futures Trading Commission (CFTC) accused Binance and its CEO of breaching trading violations in the country. The regulatory agency has filed a suit against the company and Changpeng Zhao.
The cryptocurrency market has seen the adverse effects of this decision and Bitcoin is now traded close to $27,100 after falling from over $28,500. The information was released a few hours ago by Bloomberg. Binance is the biggest crypto exchange around the world and it has millions of users located in different countries.
Binance And CEO CZ Accused by CFTC
Binance and its CEO Changpeng Zhao have been accused of violating U.S. trading laws. The CFTC has filed a suit in the U.S. District Court of the Northern District of Illinois. As per the regulatory agency, Binance should have registered many years ago in order to operate in the United States.
The complaint explains that Binance has taken a “calculated” approach to increase its presence in the United States. This is despite the fact that Binance has many times mentioned that they do not accept customers located in the United States. Furthermore, the complaint focuses on Changpeng Zhao and the former Chief Compliance Officer (CCO) Samuel Lim.
As per the CFTC, these executives ignored the requirements imposed by local regulations. Additionally, it explains that there has been an ineffective approach from Binance’s complaint program that helped customers evade Binance’s access controls.
The complaint reads as follows:
“[Binance] earned $63 million in fees from derivatives transactions and approximately 16% of its accounts were held by customers Binance identified as being located in the United States. By May 2021, Binance’s monthly revenue earned from derivatives transactions increased to $1.14 billion.”
In recent hours, Changpeng Zhao wrote on Twitter the number “4”, making reference to one of the tweets he wrote on January 2nd. At that time, CZ wrote that he was going to keep 2023 focusing on education, compliance and products & services. The fourth point he mentioned was to ignore FUD, fake news and attacks.
No further comments were made by Changpeng Zhao.
This is not the first time that Binance is affected this year. A few weeks ago, Paxos, the company managing the Binance USD (BUSD) token, announced that it was being investigated by the U.S. Securities and Exchange Commission (SEC).
Due to this reason, the company announced that they were not going to issue any other BUSD to the marker but they were to redeem the coins that already were in circulation. At the time of writing this article, Binance USD fell below the top 10 and it has now a market capitalization of $7.9 billion. In the future, there will be fewer BUSD available.
In recent hours, Bitcoin has fallen to $27,150, or a 2.7% price deacrease in the last 24 hours. Despite that, Bitcoin had a very positive beginning of the year and the first quarter seems to close with good and positive results.
Regulatory Agencies Taking Further Steps
Regulatory agencies are taking further steps to enforce compliance in the cryptocurrency industry. The recent action taken by the CFTC against Binance and its CEO Changpeng Zhao is just one example of this trend.
The CFTC’s accusations against Binance highlight the importance of adhering to local regulations, and the consequences of failing to do so. It remains to be seen how Binance will respond to these allegations, and whether other regulatory agencies will follow suit.
As more regulatory agencies begin to scrutinize the cryptocurrency industry, it is likely that we will see increased enforcement actions in the future. This could have a significant impact on the market, as companies are forced to navigate an increasingly complex regulatory landscape.
However, it could also have a positive impact in the long run, as greater regulatory oversight could help to promote transparency and reduce fraud.
It is clear that regulatory agencies are taking a more active role in shaping the future of the cryptocurrency industry. As the market continues to evolve, it will be important for companies to stay abreast of regulatory developments and take steps to ensure compliance. By doing so, they can help to build a more sustainable and trustworthy ecosystem that benefits all stakeholders.