The U.S. Commodity Futures Trading Commission (CFTC) has filed a lawsuit against Binance, one of the world's largest cryptocurrency exchanges, and its CEO Changpeng Zhao for violating the law, according to court documents filed on Monday.
The complaint was filed in the Northern District of Illinois. According to the agency, the platform violated the rules of derivatives trading by operating without proper registration.
According to the lawsuit, the crypto exchange Binance:
offered derivatives trading to US citizens since July 2019, and its compliance program was ineffective;
informed American VIP clients about the best methods of evading activity monitoring;
concealed its "true reach and operations".
In a press release, the Commission called the platform's actions "deliberate evasion of US law" and its claims of compliance a "sham."
"For years, Binance has known it was violating CFTC rules by actively working to both preserve cash flow and avoid compliance. This should serve as a warning to everyone in the digital asset world – the CFTC will not tolerate willful circumvention of U.S. law," said Commission Chairman Rostin Benham.
The regulator also claims that Binance was aware that its customers were sanctioned persons. According to the agency, one of the employees was allegedly tasked with writing a report that referred to a strict compliance audit.
Changpeng Zhao commented on the news with a tweet with the number "4". In his list, it means "ignore FUD and fake news".
Background. Read more about whether and how to restrict the freedom of crypto exchanges in Mind's article "Crypto exchanges: whether and how to regulate them".