The CFTC declares war on Binance

The US regulator has declared war on the world’s most popular exchange, Binance. Indeed, the Commodity Futures Trading Commission (CFTC) has filed a document full of accusations against Binance and its co-founder, Changpeng Zhao. The platform quickly responded by denying the accusations in full, calling them unexpected and unfortunate.

CFTC mobilized to drive Zhao and his empire to ruin

Yesterday, Monday, March 27, the CFTC, the U.S. financial derivatives regulator, decided to go after the world’s largest exchange, Binance, and its co-founder, Changpeng Zhao.

In a document presented before a federal court in Illinois, Chicago, the CFTC accuses Binance of having intentionally circumvented U.S. regulations. The platform allegedly allowed U.S. citizens to trade commodity derivatives without SEC approval. 

In addition, the exchange allegedly helped its U.S. customers bypass the compliance process, in this case KYC, or Know Your Customer, thereby violating U.S. regulatory law.

According to the CFTC, Binance committed these violations at the behest of Changpeng Zhao, who allegedly advised his employees and customers to circumvent regulatory controls in order to maximize the platform’s profits.

The CFTC also claims that CZ and other Binance executives contributed at least 20 percent of the platform’s traffic initiated by U.S. users.

The regulatory agency focused its charges on Changpeng Zhao, saying he was the direct or indirect owner of the identities and 300 accounts engaged in Binance trading.

The CFTC sees the lawsuit as a warning to all crypto companies, and suggests in its document that Binance be banned from registering and selling certain financial securities in the United States. 

Binance and CZ claim innocence

Binance was quick to get its claws out in response to the accusations against it. In a blog post, the platform called the CFTC’s action unexpected and disappointing. In other words, Binance didn’t expect the U.S. authorities to act this way after two years of collaboration.

Changpeng Zhao, Binance’s CEO, also spoke out about the allegations of KYC circumvention and multiple trading accounts. He said that the KYC procedure was one of the strictest standards and that Binance was the only trading platform to use the most efficient systems.

As for the multiple accounts, he claimed to have only two Binance accounts, one for the Binance Card and the other for his cryptocurrencies. And yes, the CEO also needs to feed his dog and pay his bills in crypto!

Personally, I have two accounts at Binance: one for my Binance Card, one for my cryptocurrencies. I also need to convert crypto from time to time to pay my personal expenses.

CZ statement

The war between regulators and crypto companies is just beginning, and Binance knows something about it. Despite their quick response in claiming innocence, the case against CZ and his team remains pending. It’s a safe bet that the next few days will be turbulent. Investors should hang on and look forward to what happens next.