The Commodities Futures Trading Commission is suing Binance and its founder Changpeng Zhao for a number of alleged infractions.
Samuel Lim, the former chief compliance officer of Binance, was also accused of encouraging the company’s illegal activities. Binance “apparently opted to willfully disregard applicable provisions of the CEA while engaging in a determined strategy of regulatory arbitrage to their commercial profit,” the CFTC charged in its lawsuit against the world’s largest cryptocurrency exchange.
For instance, Binance did not request any identity-verification data from its users. Additionally, it used a messaging system to interact with US clients that automatically destroyed written correspondence.
The CFTC submitted the complaint on Monday to the Northern District of Illinois U.S. District Court. In addition to permanent trading and registration restrictions, it is requesting disgorgement, civil monetary penalties, and an injunction against further contraventions of CEA and CFTC rules.
“For years, Binance knew they were violating CFTC rules, working actively to both keep the money flowing and avoid compliance,”
CFTC Chairman Rostin Behnam said in a statement. “This should be a warning to anyone in the digital asset world that the CFTC will not tolerate willful avoidance of U.S. law.”
“This filing is unexpected and disappointing as we have been working collaboratively with the CFTC for more than two years. Nevertheless, we intend to continue to collaborate with regulators in the U.S. and around the world,”
Binance said in a statement.In an effort to prevent the domino effects of the collapse of FTX, the third-largest cryptocurrency exchange in the world, Binance recommended the establishment of a rescue fund in November that would prevent otherwise robust crypto firms from failing.
Zhao gave no information regarding the size, scope, or distribution of the fund. Binance had backed out of a deal to purchase FTX Trading in the same month.A month prior, Binance was grappling with a hack of its blockchain network, the Binance Smart Chain, in which it might have lost over $100 million.
