CZ just got charged by the Commodities Futures Trading Commission in the US
Here's what you need to know
🦦👇🏻🧵
The CFTC has charged Binance and its founder, Changpeng Zhao, with willful evasion of federal law and operating an illegal digital asset derivatives exchange
The Commodity Futures Trading Commission filed a civil enforcement action in the U.S. District Court for the Northern District of Illinois against CZ and three entities that operate the Binance platform.
The CFTC alleges that Binance chose to knowingly disregard applicable provisions of the Commodity Exchange Act while engaging in a calculated strategy of regulatory arbitrage to their commercial benefit
The agency seeks disgorgement, civil monetary penalties, permanent trading and registration bans, and a permanent injunction against further violations of the CEA and CFTC regulations
CFTC Chairman Rostin Behnam says there is no location that will prevent the CFTC from protecting American investors.
Behnam says, "Binance knew they were violating CFTC rules...This should be a warning to anyone in the digital asset world that the CFTC will not tolerate willful avoidance of U.S. law."
Gretchen Lowe, CFTC’s Enforcement Division Principal Deputy Director and Chief Counsel, says the defendants' alleged willful evasion of U.S. law is at the core of the Commission’s complaint against Binance.
Lowe says, "Today’s enforcement action reflects that the CFTC and its Enforcement Division will pursue those digital asset platforms and individuals who flout and actively attempt to circumvent CFTC regulatory requirements."
According to the complaint, Binance has offered and executed commodity derivatives transactions to and for U.S. persons from July 2019 through the present.
Binance's compliance program has been ineffective and, at Zhao’s direction, Binance has instructed its employees and customers to circumvent compliance controls in order to maximize corporate profits.
The complaint charges that for much of the relevant period, Binance did not require its customers to provide any identity-verifying information before trading on the platform.
Even after Binance purported to restrict U.S. customers from trading on its platform, Binance instructed its customers – in particular its commercially valuable U.S.-based VIP customers – on the best methods for evading Binance’s compliance controls.
The complaint charges Binance with acting as a designated contract market or swap execution facility based on its role in facilitating derivatives transactions without registering with the CFTC, as required.
CZ is liable for Binance’s violations based on his control over Binance and his long-running failure to act in good faith concerning Binance’s misconduct.
Binance's former chief compliance officer, Samuel Lim, is charged with willfully aiding and abetting Binance’s violations through intentional conduct that undermined Binance’s compliance program.
read the charges here
cftc.gov/PressRoom/PressReleases/8680-23