Changpeng Zhao and three local Binance executives have been recommended for indictment for fraud and other financial offenses by a congressional committee.
A Brazilian congressional committee has recommended that Binance CEO Changpeng “CZ” and three other Binance executives be indicted following an investigation into financial pyramid operations in Brazil.
On October 10, the committee issued a 500-page final report accusing Zhao and local Binance executives Daniel Mangabeira, Guilherme Haddad Nazar, and Thiago Carvalho of fraudulent management practices, operating without sufficient authorization, and offering unlicensed securities trading.
In its report, the committee — led by deputy Ricardo Silva — alleged that Binance, Zhao, and others “set up an opaque network of legal entities, all controlled directly or indirectly by Zhao, without defined business purpose and with no other purpose than evading compliance with the law.”
The report also recommended indicting 45 additional individuals, citing “strong evidence” of their alleged involvement in illicit schemes.
Those named have ties to multiple crypto companies, including 123milhas, the crypto scheme 18K Ronaldinho, and others.
With Binance being accused of regulatory noncompliance in multiple other jurisdictions, Silva wrote that the company’s operations in Brazil were “surrounded by suspicion.”
The committee recommended that the Federal Public Ministry investigate all of Binance’s Brazil-based operations, particularly on tax evasion, money laundering, and the financing of organized crime and terrorism.
In addition, the committee suggested that the Brazilian Securities and Exchange Commission (CVM) investigate Binance’s sale of derivatives.
The committee claimed that Binance’s continued offering of derivatives products comprised a “repeated violation” of market regulations despite being instructed to cease trading.
The CVM is currently investigating Binance for purportedly illegally offering derivatives in the country.
The committee’s recommendations are suggestions to local authorities and are not legally binding.
The police and other regulatory agencies will determine whether or not to take further action.
Binance disclosed that it “remained committed” to working with the Brazilian committee and local law enforcement.
Binance stated that while it welcomes constructive debate about the challenges confronting the cryptocurrency industry, it “strongly rejects the exposure of our users or employees with baseless accusations of bad practices and attempts to make Binance a target.”
The regulatory hostility towards Binance coincides with a broader assault on the exchange by other jurisdictions.
In the United States, Binance is facing two separate lawsuits filed by local commodities and securities regulators, who allege that Binance and its senior executives violated various financial regulations.
Australia’s financial regulator conducted a search of Binance Australia’s premises in July, months after the company’s derivatives license was revoked.
In May, Binance left Canada, citing the country’s newly implemented regulatory restrictions.
