The U.S. Commodity Futures Trading Commission (CFTC) has filed a lawsuit against crypto exchange Binance and its CEO Changpeng Zhao (CZ) with allegations of regulatory violations in seven counts.
The complaint was filed in the U.S. District Court for the Northern District of Illinois.
- The CFTC accused Binance of engaging in proprietary trading activity with at least 300 house accounts connected directly or indirectly to CZ.
- The suit claimed those accounts were exempt from certain safeguards, including anti-fraud or anti-manipulation controls and the platform’s insider trading policy.
- Other accusations include executing unregistered futures transactions, providing illegal commodities options, failing to properly register with the derivatives regulator, law evasion, market manipulation, obscuring the location of executive offices, and failing to supervise diligently or implement anti-money laundering (AML), terrorism financing, and Know Your Customer (KYC) measures.
- CEO Zhao said they do not agree with the allegations in the lawsuit, calling the complaint unexpected and disappointing.
- CZ also confirmed that he has two accounts at Binance for his crypto holdings and Binance Card.
- Following the news, withdrawals from Binance jumped significantly, with nearly $1B in net outflows within just 24 hours.
- The CFTC had been investigating Binance since 2021.
- Binance, the largest crypto exchange by trading volume, has also been under scrutiny by the Internal Revenue Service (IRS), the Securities and Exchange Commission (SEC), and federal prosecutors in the U.S.
