The Commodity Futures Trading Commission (CFTC), an independent US federal agency, has filed a complaint against Binance, its CEO, Changpeng ‘CZ’ Zhao, and executive Samuel Lim. The CFTC said it is bringing the action to stop the defendants’ illegal conduct and behaviors and to force them to comply with the law.
The filed complaint primarily alleges unregistered commodity trading in the United States. In addition, CZ has been accused of purposefully concealing the locations of its executives’ offices, demonstrating an intentional strategy to avoid regulation, according to the agency.
The CFTC also charged Binance and its executives with violating US law by failing to supervise the exchange’s operations. The agency claims that Binance’s management helped US customers circumvent the platform’s compliance control. The CFTC said that company officials suggested using Virtual Private Networks (VPNs) to mask one’s location to US clients.
Furthermore, the CFTC claimed in the filing that Binance has never been registered with the agency and has violated federal laws designed to prevent and detect terrorism financing and money laundering.
Based on the above claims, the CFTC is asking for civil monetary fines and other ancillary remedies, such as trading and registration prohibitions, disgorgement, and pre-and post-judgment interest.
Interestingly, the complaint comes after the Securities and Exchange Commission (SEC) accused Binance of offering unregistered securities. Notably, the SEC is investigating a related Binance product called Binance USD, which the exchange developed in collaboration with Paxos.
CZ Defends Binance
In a blog post, the CEO stated that the CFTC’s complaint is disheartening because the company has collaborated with the agency for more than two years. In addition, he said the complaint lacks factual evidence, and thus the company does not agree with the agency’s allegations.
In his defense, CZ said the exchange conducts one of the highest KYC and Anti-money Laundry procedures. He added that the platform has blocked US customers by nationality and IP address.
He went further to say that Binance has the most licenses/registrations in the world, 16 in total, and has recently launched an Anti-scam campaign to protect users from fraud.