The world’s largest cryptocurrency exchange – Binance and its Chief Executive Officer Changpeng Zhao are now on top of the headlines are they were sued by the US Commodity Futures Trading Commission for allegedly breaking derivatives rules.
Earlier this week, the Commodity Futures Trading Commission reportedly filed a lawsuit in the federal court in Chicago. In which the lawsuit by the derivatives regulator claimed that Binance shirked its obligations by not properly registering with it. On the other hand, the company and its CEO have not yet released their side regarding the matter.
The Commodity Futures Trading Commission claimed in its lawsuit that the defendants (Binance and Changpeng Zhao) have fostered Binance’s US customer base while disregarding the applicable federal laws. The said action is deemed to have happened because it is profitable for the exchange platform.
It is worth noting that the Commodity Futures Trading Commission first probed the company back in 2021 for failing to keep US residents from buying and selling crypto derivatives. In which the rules of the Commodity Futures Trading Commission generally require platforms to register with the agency if they let Americans trade those products.
Commodity Futures Trading Commission is just one of the many United States regulatory bodies currently keeping a close eye on Binance’s activities. This claim is supported by several reports claiming that the Internal Revenue Service as well as the federal prosecutors have been sniffing around Binance’s compliance with anti-money laundering obligations.
On the other hand, the Securities and Exchange Commission has also been scrutinizing whether the world’s largest exchanges have supported the trading of unregistered securities. This recent case creates a significant blow to Zhao and Binance as it is a clear representation of the most significant move yet by the US to clamp down on the exchange.
Binance’s Growth Over the Years
Binance debuted in the crypto space back in 2017, not long after it immediately took on and surpassed larger rivals. Its market share was observed to have surged after the collapse of FTX last November. Due to this, Binance has argued that the global exchange must not be subjected to US jurisdiction as it has no headquarters.
The respective exchange platforms have also been lingering towards expectations of settlement with United State authorities that are probing their business practices as well as aiming to close compliance gaps that existed in its early years.
Chief Strategy Officer Patrick Hillmann has detailed Binance’s initiatives in building out its compliance program and team through a 14-page letter addressed to the United States senators. However, the said letter has failed to shed a light on the company’s finances that the lawmakers had requested.