Just about a week ago, CFTC, the US regulator in charge of trading commodities and other derivatives, sued the largest crypto exchange in the world, Binance. Currently, the exchange has a market cap of $7.09 billion, making it the preferred choice of crypto investors.
According to this lawsuit, the company let Americans trade crypto without complying with CFTC regulations. The main point of this charge is that Binance and its CEO, ChangPeng Zhao, were coaching certain wealthy customers on how to stay under the regulatory radar. According to CFTC, this exchange and the main guy, popularly known as CZ, were also instructing employees to avoid certain compliance requirements and maximize company profit.
The CFTC filed a lawsuit in Chicago against CZ, the former Chief Compliance Officer Samuel Lim, and three entities operating the Binance platform for “willful evasion of US law.”
History of Binance and US Authorities
This is not the first time that Binance is experiencing issues due to compliance policy violations. Two years ago, the company was informed about these violations, and, according to CZ, they invested significant amounts of money in fulfilling all the demands and obeying the rules.
Hence, Binance finds this lawsuit “unexpected and disappointing,” considering all their efforts so far. As a result, Binance saw $1.6 billion of overall withdrawals and $852 million within 24h, according to Nansen.
This will, of course, have a significant impact on Binance’s reserves they claim to keep in native tokens.
Conclusion
Currently, everything is in motion. After CFTC, another regulator, The Internal Revenue Service and Securities and Exchange Commission, is starting its own investigation of Binance. While Binance is facing a compliance lawsuit, SEC starts investigating another large crypto exchange, Coinbase.
At the same time, two crypto-supporting banks, Silvergate and Signature Bank, shut down. These were two mainstream connections between crypto and fiat currency. Is there going to be another surprise, as was FTX? Can Binance leave unharmed? It’s left to be seen after regulators make their decisions.
