Binance Willfully Broke Commodity Laws in the US: CFTC Chair
- The Chairman of the CFTC, Rostin Behnam, said that crypto exchange Binance intentionally broke laws pertaining to derivatives and commodities.
- Behnam said that Binance willfully allowed US citizens to access the main exchange via virtual private networks (VPNs) and other obfuscation tools.
- “If you are going to offer futures contracts in the US, there is a clear understanding that you are registered with the CFTC and comply by the law,” he said.
- The CFTC filed a lawsuit against the crypto exchange a few weeks earlier for manipulation of markets and engaging in insider trading.
The world’s largest crypto exchange by trading volume, Binance, has reached significant milestones since its establishment in 2017, leaving all of its competitors behind. Interestingly, the exchange headed by Changpeng Zhao, also known as “CZ” in the crypto space, has intentionally broken laws related to offerings such as derivatives and commodities, says the Chairman of the Commodity Futures Trading Commission (CFTC), Rostin Behnam. The regulator also recently filed a lawsuit against the crypto company.
As per a Bloomberg report, the CFTC Chair was present at a fireside chat that took place at the DeCenter Spring Conference at Princeton University on April 14 and stated that Behnam told those in attendance that Binance leaders had intentionally thrown the rule book out the window, allowing citizens in the United States to access the Binance crypto exchange via virtual private networks (VPNs) and other obfuscation tools.
“These are not unsophisticated individuals,” said the CFTC Chair regarding the operations that Binance conducted without approval from the regulator at the event, while adding:
“They are starting large companies and offering futures contracts and derivatives to U.S. customers. If you are going to offer futures contracts in the US, there is a clear understanding that you are registered with the CFTC and comply by the law.”
Interestingly, this comment from Behnam comes following a lawsuit that was filed against Binance and its CEO Zhao by the CFTC for operating in the US without any approval and providing its services to the citizens. The regulator has reasons to believe that the leading crypto exchange has allowed people to access its platform without proper registration since 2019.
The CFTC added that Binance was able to hide its operations in the United States by obscuring the location of its executive offices with the help of 300 “house accounts.” Moreover, the Commission stated that the leading crypto exchange kept this information “top secret” and did not respond to the investigative subpoenas seeking information on its trading activity launched by the Commission.
The Commission also accused Binance of manipulating the crypto market and breaking multiple trading rules since 2019 while failing to comply with US regulations. The CFTC also claims that the employees at the crypto exchange were engaged in “insider trading” and making money by betting against the customers.
Zhao, who claims that Binance is compliant with every regulator, stated that he is disappointed in the accusations put forth by the CFTC and added that the crypto exchange “does not trade for profit or ‘manipulate’ the market under any circumstances.” The billionaire called the allegations mentioned in the lawsuit “an incomplete recitation of facts.”
On the other hand, Zhao further stated that it is impossible for employees to do “insider trading” since Binance has a 90-day no-day-trading rule for employees while adding:
“This is to prevent any employees from actively trading. We also prohibit our employees from trading in Futures.”
As earlier reported by BitcoinWisdom, last year the Chairman of the Securities and Exchange Commission (SEC), Gary Gensler, said that he backed Congress if they gave the CFTC the power to regulate the leading cryptocurrencies, including Bitcoin (BTC) and Ether (ETH).