Commodity Futures Trading Commission (CFTC) has sued the world’s biggest cryptocurrency exchange, Binance, for operating an “illegal” exchange and a “sham” compliance program.
CFTC sued the firm for cultivating US business while failing to properly register with authorities according to reports.
Binance said “This filing is unexpected and disappointing, as we have been working collaboratively with the CFTC for more than two years. “Nevertheless, we intend to continue to collaborate with regulators in the US and around the world,”
Meanwhile, Binance is accused of violating numerous US financial laws, including money-laundering rules, but the cryptocurrency firm defended its practices.
While its states that significant investment has been in place to ensure that no US users were active on the platform, including blocking users who identified themselves as American citizens or residents or who had a US mobile number.
The CFTC also said Binance had been active in the US since 2019 but had never properly registered with the government or complied with relevant US laws, using an “intentionally opaque” global corporate structure in a bid to escape oversight.
And over the years, Binance did not require its customers to offer any identity verification information before trading on the platform, as the CFTC alleged in the civil lawsuit filed in federal court in Illinois.
While the firm announced it was tightening its rules in 2021, the CFTC said it advised US-based customers on how to evade those controls using virtual private networks (VPNs) and shell companies. The firm evaded the rules “to maximize corporate profits,” the CFTC said.
It asked the US court for restitution and fines, as well as permanent trading and registration bans.
CFTC chairman Rostin Behnam said the government filed the case to protect American investors, and it should serve as a broader caution to those working in the crypto sector.
Behnam said, “For years, Binance knew they were violating CFTC rules, working actively to both keep the money flowing and avoid compliance.” “This should be a warning that the CFTC will not tolerate willful avoidance of US law,”
