The crackdown on illicit digital currency activity has finally reached the top of the cryptocurrency food chain as U.S. regulators have sued Binance Holdings, operator of the world’s number one cryptocurrency exchange, alleging that it is operating illegally and seeking to permanently ban it from the United States. The Commodity Futures Trading Commission (CFTC) also charged Binance Founder and Chief
Executive Officer Changpeng Zhao with operating an illegal exchange and willfully evading federal law.
“The CFTC will continue to use all of its authority to find and stop misconduct in the volatile and risky digital asset market,” said CFTC Chairman Rostin Behnam. “For years, Binance knew they were violating CFTC rules, working actively to both keep the money flowing and avoid compliance.”
The CFTC charges that Zhao, the most powerful player in the world of cryptocurrencies, and his former compliance director, Samuel Lin, intentionally disregarded federal law as they not only structured Binance to avoid U.S. registration requirements, but also had employees instruct customers how to evade compliance controls. Binance, according to the complaint, failed to require customers to provide identity-verifying information before trading and did not use basic compliance procedures designed to help detect terrorist financing and money laundering. Instructions to customers on how to dodge compliance were sent through a messaging application that was set to automatically delete conversations, according to the lawsuit.
“The defendants’ own emails and chats reflect that Binance’s compliance efforts have been a sham and Binance deliberately chose–over and over–to place profits over following the law,” said Gretchen Lowe, CFTC’s Enforcement Division Principal Deputy Director and Chief Counsel.
In an online statement, Zhao said that he had worked cooperatively with the CFTC for more than two years, claiming, “Binance is committed to transparency and cooperation with regulators and law enforcement.”