Bitcoin, Ether Fall As CFTC Sues Binance And CZ For ‘Willful’ Violation Of US Laws ⋆ ZyCrypto
The world’s largest crypto exchange by trading volume, Binance, and its CEO, Changpeng Zhao, are being sued by the US Commodity Futures Trading Commission (CFTC) for allegedly violating trading and derivatives rules. This was announced by the US authorities on Monday.
Markets took a sharp dive in the wake of the CFTC’s action against Binance today.
CZ, Binance Face CFTC Lawsuit
The CFTC has launched an attack on the Binance exchange and CZ.
In the lawsuit filed in the US District Court for the Northern District of Illinois on Monday, the regulator alleged that Binance and its CEO operated a derivatives trading facility in the US since July 2019, which allows local clients to trade swaps, futures and options. on cryptocurrencies including bitcoin (BTC), ether (ETH) and litecoin (LTC).
The CFTC further claimed that Binance made “calculated” attempts to expand its footprint in the US despite publicly claiming that it would restrict US citizens from accessing the platform.
Binance, Zhao and former Chief Compliance Officer Samuel Lim all allegedly “chose to ignore these requirements and undermined Binance’s ineffective compliance program by taking steps to help customers evade Binance’s access controls,” the agency added.
One of the ways Binance allegedly undermined its compliance program was by allowing its employees to help customers use virtual private networks to spoof their positions.
The suit argued that Binance’s reluctance to disclose its headquarters indicates the company’s attempt to evade regulation.
“Binance’s reliance on a maze of corporate entities to operate the Binance platform is deliberate; it is designed to hide the ownership, control and location of the Binance platform,” the complaint said, adding that “Zhao answers to no one but himself.”
The filing also includes messages sent through the encrypted messaging app Signal, which were collected from CZ’s phone. It noted that the CEO himself instructed Binance representatives to use Signal to communicate with US-based customers, underscoring their “willful evasion of US law.”
“The defendants’ own emails and chats reflect that Binance’s compliance efforts have been a sham, and Binance deliberately chose — over and over again — to place profit over following the law,” said CFTC Chief Counsel Gretchen Lowe.
The CFTC is asking the court to enjoin Binance from further violations of the Commodity Exchange Act, civil monetary penalties, trading and registration bans, deportation and a jury trial.
Binance Gets Sued Drags Crypto
CZ simply responded to the lawsuit news tweeting “4”, referring to an earlier tweet where he said that would mean ignoring FUD and attacks.
Notably, the bitcoin price went lower after the lawsuit was filed. The leading cryptocurrency fell 3.18% to trade hands at $26,963.35, while Binance’s native token, BNB, traded 5.93% lower.
Ether follows a similar pattern: the world’s second-largest cryptocurrency is down nearly 3.08% in the past 24 hours, trading at $1,713.56.
