CFTC files lawsuit against Binance

The US authority CFTC files a lawsuit against Binance. The world’s largest crypto exchange is accused of eight different charges. These include systemic insider trading and the targeted circumvention of anti-money laundering and anti-terrorism measures.

CFTC files lawsuit against Binance

The Commodity Futures Trading Commission (CFTC) is filing a lawsuit against Binance , a public document shows. The subject of the legal dispute is transactions that Binance allegedly operated illegally in the USA.

The CFTC accuses the world’s largest crypto exchange of illegal futures trading. The crypto exchange sells these under the Binance Futures brand name. There you can find more than 200 different trading pairs.

Binance is said to intentionally violate the Commodity Exchange Act (CEA) and the regulatory measures of the CFTC. However, not only various Binance entities are affected by the lawsuit, but also explicitly the company’s managing director, Changpeng Zhao.

The lawsuit also targets Samuel Lim, the former head of Binance’s compliance department.

The lawsuit alleges that Binance operates a centralized digital asset trading platform along with numerous other corporate vehicles through an intentionally opaque corporate structure.

Writes the CFTC itself. It further states:

The defendants knowingly flouted the applicable provisions of the CEA, pursuing a calculated strategy of regulatory arbitrage for their commercial gain.

As punishment, the agency is demanding “compensation, civil penalties, a permanent ban on trading and registration, and a permanent injunction.”

Although Binance had sufficient capacity to implement applicable laws, it rejected this measure, according to the indictment. Instead, the crypto exchange was geared towards maximizing profits.

Under Zhao’s leadership, the company even intentionally instructed its compliance department to not comply with regulatory requirements. Customers have also been asked to bypass them.

New terrorism allegations against Binance

According to the indictment, CZ and Lim specifically instructed their US customers to use VPNs to hide their true location. This allowed them to use their unidentified accounts to trade crypto for crypto for longer than US authorities allowed.

In addition, I have insider trading through Binance System. The company instructed its employees to comply with new regulations to prevent insider trading, but 300 company accounts are excluded from this regulation.

In addition, the company is a welcome business partner for terrorist organizations. The CFTC accuses Binance of an incident in this regard in 2019. At that time, Binance received information about money flows from the Palestinian Hamas. This conducted many small transactions through the crypto exchange to accept donations and pay for their equipment.

In response to the warning, Lim spoke to a so-called MLRO (Money Laundering Reporting Officer). Lim remarked, “come on, they’re doing illegal activities here,” to which the MLRO explained, “we see the evil, but we turn a blind eye.”

At the time, Binance was probably unaware that Hamas was behind a slew of small money transfers. The division of large amounts of money into many small shipments aroused the suspicions of the employees.

Binance warns dark web users

In another case, Lim noticed a user sending funds from darknet markets to Binance. According to the CFTC, the deal involved a whopping $5 million. A Binance employee then asked Lim if the user’s account needed to be suspended.

“Or,” he asked, should one “tell the user to just create a new account?” Lim then replied: “Tell him to be careful with his money flows, especially from the dark web. He can come back with a new account, but the current one has to go, it’s tainted.”

Here’s how CZ is responding to the lawsuit CFTC

Binance Managing Director CZ also reacted quickly to the allegations. First he tweeted the number 4 . This is a link to a previous tweet. Under point four, he asked users to ignore “FUD, false reports and attacks”.

In a subsequent press release , he questioned the accuracy of the account on which the lawsuit is based:

The complaint appears to be an incomplete account of the facts and we disagree with the characterization of many of the points raised in the complaint.

Another publication contains counterstatements to specific allegations. For the company, the lawsuit is incomprehensible because it has been working effectively with the US authorities for years.

In fact, since 2022, Binance itself has been training law enforcement agencies in how to use digital assets. Earlier this year, the company earned a Certified Sanctions Specialist qualification .

With the allegations, the US may be continuing a tough stance on the crypto industry that began with SEC interventions in February.

So far, the BNB course has only reacted cautiously to the legal dispute. The cryptocurrency invented by Binance is down 5.40 percent in the daily trend.