CFTC Suing the Largest Crypto Exchange: Binance Why?

CFTC is filing a suit in Chicago today against Binance, which is the largest crypto exchange in the world, and its CEO CZ Binance, the largest cryptocurrency exchange in the world, has just been caught. Cz, the founder has just been charged because, as of today, the CFTC is suing Binance and CZ over willful evasion of U.S. laws, as well as unregistered crypto derivatives products. The regulator is saying that Binance shirked its obligations by not properly registering with it. The CFTC alleges that Binance offered unregistered crypto derivatives products and directed U.S. customers to evade compliance controls through the use of VPNs. The CFTC is urging users to use things like VPNs to get outside of U.S. jurisdiction and Binance hasn’t properly registered Carl mentioned in the filing.

Let me read you a portion of it because it is very fascinating.

They say that Binance’s reliance on a maze of corporate entities that operate the Binance platform is deliberate.

It is designed to obscure the ownership, control and location of the Binance platform, Guys that adds doubt that CZ, the CEO of Binance answers to no one, but himself and certainly doesn’t answer to U.S. regulators, because Binance isn’t located in the U.S. it operations make up a very small portion of its business If you hold cryptocurrency. CZ of Binance has responded What are the details? The lawsuit filed in the U.S. District Court of Illinois on Monday alleges number one that Binance operated a derivatives trading operation in the U.S. They offered trades for cryptocurrencies, including Bitcoin, Ethereum, Litecoin, Tether and BUSD, which the suit referred to as commodities.

CFTC Files Lawsuit Against Binance for Allegedly Allowing Illegal Trading and Spoofing Location

You operated a derivative exchange in the United States, so you have to register, which you never did .”.

This suit also alleges that the company, under CZ’s leadership, directed its employees to spoof their location through the use of virtual private networks, ( VPNs ), So not just the customers of the exchange, but also Binance employees were using VPNs to get around specific regulations. On top of that, they’re also charging Binance with not implementing know-your-customer or anti-money laundering processes and having a poor anti-evasion program. And by the way, they don’t just make the statement they back it up. These allegations are up with internal chats.

Binance Encouraged Use of VPNs by US Customers, CFTC Lawsuit Reveals

Customers so evade such controls by using VPNs to conceal their true location. Vpn use by customers to access and trade on the Binance platform has been an open secret and Binance has consistently been aware of and encouraged the use of VPNs by U.S customers. Regulatory clarity is very important for the industry to continue to grow, so I think, having that is very important. Some of these alleged internal chats from Binance are wild. The filing pointed to internal chats between Binance employees, including Samuel Lim, the exchange’s chief compliance officer through January 2022, who is also a defendant the way He’s also getting sued by CZ, with the exchange, where Lim appeared to direct an employee of Binance. The suit alleges that Binance allowed customers to hide their location in a direct quote, allegedly from Lim. “He said” On the surface. We cannot be seen to have U.S. users, but in reality, we should get them through. Other creative means .”. The suit also alleges that the exchange was well aware that sanctioned entities and individuals from sanctioned regions were trading on its platform sharing chat logs, where Lim said, terrorists usually send small sums that are barely enough to purchase weapons with. He also said other customers were here for the crime.

How did the CFTC gain access to all these messages?

Well, according to the suit, Binance employees, including CZ, by the way, used The Signal app with an auto-delete functionality to communicate with each other, obviously not illegal. The suit implied that the CFTC had access to CZ’s phone saying it was able to collect Signal, text chains and group chats from it. So was CZ’s phone compromised?

CZ Responds to CFTC Lawsuit Against Binance with Cryptic Tweet

That’s what the CFTC says, although maybe that’s just a cover. Maybe they have an internal leak, a rat. Somebody feeding them this info Either way.

Cz responded We’ll try to keep 2023 simple, Spend more time on fewer things. Do’S and don’ts 1 ) Spend time in education, 2 ) Compliance, 3 ) Product and service 4 ) Ignore thud, fake news, attacks, etc. .”

In my opinion, Cz knew something like this was going to happen. You can’t become the biggest crypto exchange in the world globally by trading volume without making a few enemies of regulators.

Binance faces regulatory hurdles as it builds financial products outside traditional systems.

Binance is building products, financial products, where you don’t need the traditional system and the traditional system. Regulators have an issue with that. Binance has the money, I’m sure they’d gladly pay it off to brush this past them. The worst-case scenario would be CZ or other high reps go to jail. Of course, to do that, you have to find them, and nobody knows quite where these individuals are. Binance has no headquarters.

A Binance HQ is a concept You don’t necessarily need to be in the office to be productive and by the way, some people are saying that the worst outcome potential of all this is Binance – gets banned outright in the US, but I got news for you: Binance Is already not allowed in the US? That’s why we have Binance US.

Francesco La Rocca

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