Today, the US Commodity Futures and Trading Commission (CFTC) filed a lawsuit against cryptocurrency exchange Binance and its CEO, Changpeng “CZ” Zhao. The regulator accuses the executive and the company of allegedly violating the country’s trading rules.
In an official blog post, Zhao responded to the complaint, calling it “unexpected” and “disappointing”. The executive claims that the company has worked with the US regulator since 2021. Zhao said:
(…) The complaint appears to contain an incomplete recitation of the facts, and we do not agree with the characterization of many of the issues alleged in the complaint.
Binance CEO eating the company’s ‘dog food’?
Zhao breaks charges, including Binance’s ability to enforce compliance with US trading rules. The CEO of the cryptocurrency exchange claims that the platform has implemented mandatory Know Your Customer (KYC) and anti-money laundering rules for all customers.
Furthermore, Zhao claims that Binance has the technological ability to “block” US users from accessing its international platform. Here, users can trade crypto options and perpetual futures contracts with leverage.
In this sense, the statement denied that Binance would use its platform to trade against its clients. It only allows certain institutional partners to provide liquidity in several “less liquid pairs” for a “small profit”. Zhao himself denied that he is profiting from trading on the cryptocurrency exchange:
Personally, I have two accounts on Binance: one for the Binance Card and one for my crypto holdings. I eat our dog food and store my cryptocurrency on Binance.com. I also need to convert cryptocurrency from time to time to pay my personal or card expenses.
The cryptocurrency exchange claims that it has implemented additional restrictions to prevent employees from manipulating or taking profit on the tokens and other newly listed products. Any listing information, launchpad and franchise data is held under “strictly anyone” policies.
Binance is already suffering from the CFTC action
Zhao also said that the cryptocurrency exchange is cooperating with law enforcement agencies to prevent illegal activity on the platform. As a result, these agencies were able to freeze more than $125 million in funds from compliance and law enforcement actions in 2022 and $160 million in 2023.
Despite using the exchange in his personal life, Zhao denied that he profited from its financial products:
(…) He has never participated in the Binance Launchpad, Earn, Margin or Futures. I know the best use of my time is to build a solid platform that serves our users. At Binance, we look for friendly solutions to all problems. We cooperate with regulators and government agencies around the world.
As Bitcoinist reported earlier today, the CFTC’s action is allegedly trying to “protect” US clients by restricting access to “the volatile and risky digital asset market.” It remains to be seen if the legal action will have a lasting impact on Binance’s trading activities.
Net outflows from Binance have started
– 307 million dollars last 24 hours
– 145 million dollars last hourYou will monitor this over the next few days.
This is not surprising, because it makes no sense to hold the same amount of risk as last week. We’ll see if this leads to a panic when Asia wakes up pic.twitter.com/1AJQL6PXx4
– Evanss6.eth (@Evan_ss6) March 27, 2023
Chart from Tradingview
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