Today, the U.S. Commodities and Futures Trading Commission (CFTC) filed a lawsuit against crypto exchange Binance and its CEO, Changpeng “CZ” Zhao. The regulator is accusing the executive and the company of allegedly violating trading rules in the country.
In an official blog post, Zhao replied to the complaint and classified them as “unexpected” and “disappointing.” The executive claims that the company has worked with the U.S. regulator since 2021. Zhao said:
(…) the complaint appears to contain an incomplete recitation of facts, and we do not agree with the characterization of many of the issues alleged in the complaint.
Binance CEO Eats The Company’s “Dog Food”?
Zhao breakdown the charges, including Binance’s capacity to enforce compliance with U.S. trading rules. The crypto exchange’s CEO claims the platform has implemented a mandatory Know Your Customer (KYC) program and Anti Money Laundering rules for all customers.
Furthermore, Zhao claims that Binance has the technological capability to “block” U.S. users from accessing its international platform. Therein, users can trade crypto options and perpetual futures contracts with leverage.
In that sense, the statement denied that Binance uses its platform to trade against its customers. It only allows certain institutional partners to provide liquidity in several “less liquid pairs” for a “small profit.” Zhao himself denied that he benefits from trading on the crypto exchange:
Personally, I have two accounts at Binance: one for Binance Card, one for my crypto holdings. I eat our own dog food and store my crypto on Binance.com. I also need to convert crypto from time-to-time to pay for my personal expenses or for the Card.
The crypto exchange claims that it has implemented additional restrictions to prevent employees from manipulating or taking profits on newly listed tokens and other products. Any information regarding listing, launchpad, and privilege data is kept under “strict policies for anyone.”Binance Already Suffering From CFTC Action
Zhao also said that the crypto exchange is cooperating with law enforcement agencies to prevent illegal activity on the platform. As a result, these agencies have been able to freeze over $125 million in funds from compliance and law enforcement actions in 2022 and $160 million in 2023.
Despite using the exchange for his personal life, Zhao denied that he benefits from its financial products:
(…) also never participated in Binance Launchpad, Earn, Margin, or Futures. I know the best use of my time is to build a solid platform that services our users. At Binance, we look for amicable solutions to all problems. We are collaborative with regulators and government agencies all around the world.
As Bitcoinist reported earlier today, the CFTC’s action is allegedly trying to “protect” U.S. customers by limiting 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 commercial activities.
Binance net outflows have started
-$307m last 24hrs-$145m last 1hr
Will be watching this over the next few days.
This is not surprising, as it doesn't make much sense to keep as much risk there as you had last week. Will see if this leads to panic when Asia wakes up pic.twitter.com/1AJQL6PXx4
— Evanss6.eth (@Evan_ss6) March 27, 2023
Chart from Tradingview
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