Key points to remember
- The CFTC is suing Binance.
- The regulator says Binance offers commodity trading services to US customers.
- He also believes that Binance has helped customers circumvent US compliance checks.
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The CFTC today filed a 74-page lawsuit against Binance in the U.S. District Court for the Northern District of Illinois. He claims the company engages in jurisdictional arbitration in order to offer commodity trading services to its US clients.
Binance is once again in hot waters with regulators.
Today, the United States Commodity Futures Trading Commission for follow-up the world’s leading crypto exchange and its CEO, Changpeng “CZ” Zhao, for his numerous alleged violations of the Commodities Exchange Act and CFTC regulations.
According to the regulator, Binance deliberately ignored the provisions of the CEA by engaging in regulatory arbitrage strategies, meaning the company circumvented US law and restrictions by relying on friendlier jurisdictions. While Binance was originally founded in China, the company currently has no official headquarters anywhere.
“Today’s enforcement action demonstrates that there is no location, or an alleged lack of location, that will prevent the CFTC from protecting U.S. investors,” said CFTC Chairman Rostin Behnam in a press release. “For years, Binance has known they were violating CFTC rules, actively working both to keep money flowing and to avoid compliance.”
The CFTC alleges that Binance has been illegally providing commodity trading services to US customers since 2019. Interestingly, the regulator explicitly named BTC, ETH, and LTC among those commodities. Securities and Exchange Commission Chairman Gary Gensler, however, claimed in February that every cryptocurrency other than Bitcoin is a security.
The CFTC further claimed that Binance instructed US employees and customers how to circumvent the exchange’s compliance checks. The agency is seeking restitution, civil monetary penalties, permanent trade and registration bans, and a permanent injunction against further commodity law violations.
Disclaimer: At the time of writing this article, the author of this article owned BTC, ETH, and several other crypto assets.