U.S. regulators charged China-based crypto exchange Binance with attempting to attract U.S. customers and circumventing its own compliance program.
The Commodity Futures and Trading Commission (CFTC) alleges that Binance violated numerous parts of the U.S. Commodity Exchange Act.
The CFTC says that Binance executed commodity derivatives transactions for U.S.-based customers since July 2019 without establishing appropriate compliance procedures or requiring customers to provide confirmation of their identities.
- The complaint says that CEO Changpeng Zhao and former compliance chief Samuel Lim "actively cultivated lucrative and commercially important ‘VIP’ customers, including institutional customers, located in the United States."
- It cites internal Binance communications showing that Zhao and Lim suggested that institutional or VIP clients use "creative means" to circumvent U.S. regulations.
- It also alleges that Binance — the largest cryptocurrency exchange in the world — sought to obscure where its subsidiary companies were located as part of what Zhao described as an effort to "keep countries clean."
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- The complaint describes Bitcoin and Ether as commodities, touching on a long-standing debate among U.S. regulators about whether major cryptocurrencies should be legally designated as securities or commodities.
