But it’s not quite the seismic event that was FTX’s collapse, or even the Terra/Luna meltdown. The CFTC’s lawsuit is certainly not great news for Binance, or for crypto more broadly. Or anywhere, really - CZ claims that the company’s headquarters are wherever he is at any point in time, “reflecting a deliberate approach to attempt to avoid regulation,” according to the CFTC’s lawsuit. The CFTC can’t bring criminal charges, but it can seek heavy fines and potentially ban Binance from registering in the US in the future.īinance said the lawsuit was “unexpected and disappointing,” adding that it has made “significant investments” in the past two years to ensure that US-based investors are not active on the platform.Īs news of the lawsuit broke Monday, Zhao, known as “CZ,” tweeted the number 4, pointing to a part of a previous statement: “Ignore FUD, fake news, attacks, etc.” (FUD is a commonly used acronym among crypto folks that stands for “fear, uncertainty, doubt.”)īinance has long argued that it isn’t subject to US laws because it doesn’t have a physical headquarters in America. Which, you know, isn’t something you want to be caught doing. The commission, which regulates US derivatives trading, said the company and its CEO, Changpeng Zhao, “instructed its employees and customers to circumvent compliance controls in order to maximize corporate profits.” ![]() Here’s the deal: The CFTC alleges that Binance and its CEO violated US trading laws by, among other things, secretly coaching “VIP” customers within the United States on how to evade compliance controls. Obviously, Binance took one look under the hood at FTX, now at the center of a massive federal fraud investigation, and promptly bailed.) (And if that name sounds familiar, it may because back in November, Binance briefly flirted with bailing out its smaller rival, FTX. ![]() Today, that regulator sued Binance, the world’s largest cryptocurrency exchange, for allegedly doing just that. And if you’re a big international platform for trading crypto derivatives, you can’t let Americans trade those products if you haven’t registered with the boring-sounding but not-to-be-trifled-with federal regulator known as the Commodity Futures Trading Commission, or CFTC. If you live in America, you’re not allowed to trade crypto derivatives.
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