Binance lawsuit alleges company offered unregistered crypto, avoided regulation
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Binance Unregistered Crypto Lawsuit Overview:
- WHO: The Commodity Futures Trading Commission (CFTC) has filed a lawsuit against Binance Holdings Limited, its CEO and founder Changpeng Zhao, and its COO Samuel Lim.
- Why: The CFTC alleges that Binance, Zhao and Lim skirted federal registration and regulatory requirements for the cryptocurrency exchange by offering unregistered crypto and helping US customers avoid compliance controls the company itself set.
- Where: The lawsuit was filed in Illinois federal court.
- What are my options: The twins is a cryptocurrency exchange alternative to Binance.
Binance Holdings and its founder and CEO Changpeng Zhao ignored federal registration and regulatory requirements while allegedly offering unregistered cryptocurrency on the exchange, a new lawsuit alleges.
The Commodity Futures Trading Commission (CFTC) is filing the lawsuit against Binance, Zhao and Chief Operating Officer Samuel Lim, who the agency claims maintained an “ineffective compliance program.”
“For years, Binance knew it was violating CFTC rules and actively worked to both keep the money flowing and avoid compliance,” CFTC Chairman Rostin Behnam said in a statement.
The CFTC claims that the cryptocurrency exchange has also taken steps to help its US customers “avoid the compliance controls Binance purports to implement to prevent and detect violations of US law.”
Among other things, Binance, the CFTC claims, has instructed its US customers to hide their locations so they can continue to submit proof of identity and location to continue trading – after previously announcing that this was prohibited.
Binance has never registered with the CFTC “in any way,” the suit says
Despite this, the CFTC claims that Binance “has never registered with the CFTC in any capacity and has ignored federal laws that are essential to the integrity and vitality of the US financial markets.”
“Throughout the relevant period, and through the operation of the Binance platform, Defendants Binance, aided and abetted by Lim, and Zhao have violated the core provisions of (Act on exchange of goods) and (CFTC) regulation,” the Binance lawsuit states.
The CFTC is seeking a jury trial and seeking an injunction along with an award of, among other things, full restitution for affected customers or investors, and an order requiring Binance to pay civil monetary penalties.
A class action lawsuit was filed against Binance.US in June 2022 by a consumer who claimed that the company had misled investors about the terraUSD (UST) stablecoin and its Terra blockchain ecosystem.
If you traded with Binance, you might be eligible to participate in a Binance unregistered tokens class action investigation.
The CFTC is represented in-house by Joseph Platt, Candice Haan, Elizabeth N. Pendleton, Scott R. Williamson and Robert T. Howell.
The Binance Unregistered Crypto Lawsuit is Commodity Futures Trading Commission v. Zhao, et al.Case No. 1:23-cv-01887, in the US District Court for the Northern District of Illinois.
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