US financial laws accused Binance for breaking laws
US regulators have increased their attack on the cryptocurrency business by accusing Binance, a prominent cryptocurrency exchange, of breaking “several” US financial regulations.
The company allegedly failed to register legally in the US, according to the Commodities Futures Trading Commission (CFTC).
Also, the corporation was charged with violating “know your customer” regulations meant to prevent money laundering.
Binance has come forward to defend its practices and stated that it had made considerable efforts to prevent US users from accessing its platform. The measures included blocking users with US mobile numbers or those identified as American citizens or residents. The company expressed its disappointment at the recent allegations and asserted its commitment to cooperate with regulators in the US and worldwide. Binance also mentioned that it had been working with the CFTC for over two years.
According to the company, safeguarding its users and working together with regulators to create a well-defined regulatory system is the ideal course of action. The firm, which was established in 2017, is presently the largest centralized exchange for digital assets globally and has over 100 million users. Changpeng Zhao, a Chinese-born Canadian billionaire, leads it, and he was also mentioned in the complaint.
The CFTC said Binance had been active in the US since 2019, but never properly registered with the government or complied with relevant US laws, using an “intentionally opaque” global corporate structure in a bid to escape oversight.
For much of that time, Binance did not not require its customers to provide any identity-verifying information before trading on the platform, the CFTC alleged in the civil lawsuit, filed in federal court in Illinois.
In 2021, the firm announced it was tightening its rules. But at the same time, the CFTC said it advised US-based customers on how to evade those controls using virtual private networks (VPNs) and shell companies.
The firm evaded the rules “to maximize corporate profits,” the CFTC said.
It asked the US court for restitution and fines, as well as orders limiting Binance’s activity.
CFTC chairman Rostin Behnam said the government filed the case to protect American investors and it should serve as a wider warning to those working in the crypto sector.
“For years, Binance knew they were violating CFTC rules, working actively to both keep the money flowing and avoid compliance. This should be a warning that the CFTC will not tolerate willful avoidance of US law,” he said.
Around the time the lawsuit was announced, Mr Zhao posted on Twitter a message that read “4” – apparently referring followers back to advice in an earlier post urging people to “ignore …. fake news, attacks, etc.”
After several years of explosive growth, the crypt industry has been struggling with a sharp decline in prices, as well as increased scrutiny from regulators.
Last year, US officials warned the industry that they planned to use existing laws to more rigorously enforce against issues such as conflicts of interest and lack of transparency.
In October, the CFTC said more than 20% of the cases it had pursued in the 12 months prior concerned the sector, including cases against Bitfinex and Tether. It is also among the agencies in the US that has brought fraud charges against Sam Bank man-Fried and FTX, previously a major rival to Binance.