CFTC Allegations are ‘an Incomplete Recitation of Facts,’ Says Binance CEO
- Binance CEO Changpeng Zhao said that he is surprised and disappointed by the CFTC lawsuit since his company has been working with the agency for the past two years.
- “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,” said Zhao.
- The executive said that his company blocks US users by their IPs, mobile carriers, device fingerprints, bank deposits and withdrawals, credit card bin numbers, etc.
- CZ mentioned for the first time in this blog that they have affiliates that provide liquidity for less liquid pairs and prohibit employees from trading in futures.
- Zhao said that he has two accounts at his exchange, one for the Binance Card and the other for storing crypto assets.
Binance, the world’s largest crypto exchange by spot trading volume, is the newest exchange to come under the wrath of regulatory authorities, as the Commodity Futures Trading Commission (CFTC) sued the leading exchange and its co-founder and CEO, Changpeng Zhao, also known as CZ in the crypto space. In response to the lawsuit filed in the District Court for the Northern District of Illinois, Zhao stated that he is surprised and disappointed since his company has been working with the CFTC for the past two years.
In a blog post, Zhao wrote that “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.” Interestingly, the CFTC claims that Binance failed to meet its regulatory obligations by not properly registering with the derivatives regulator and therefore, violated trading rules.
The CFTC added in the lawsuit that Binance allowed US citizens to trade Bitcoin (BTC), Litecoin (LTC), and Ether (ETH) in 2019 despite knowing that it was not allowed to do so. The crypto exchange deliberately violated the law, claims the CFTC in the lawsuit, which was also filed against the company’s Chief Compliance Officer, Samuel Lim.
Zhao said that these allegations are not true, adding that his crypto exchange was the first non-US exchange to introduce anti-money laundering (AML) and know your customer (KYC) laws, and that Binance today has one of the highest standards in KYC and AML.
“We block US users by nationality (KYC), IP (including commonly used VPN endpoints outside of the US), mobile carrier, device fingerprints, bank deposits and withdrawals, blockchain deposits and withdrawals, credit card bin numbers, and more,” Zhao said.
The Binance executive also pointed out that his exchange has worked with regulators in 2022 and 2023, helping them freeze/seize more than $125 million in funds in 2022 alone and $160 million in 2023 so far. Zhao said that the firm’s compliance team consists of more than 750 people and many of them have prior law enforcement and regulatory agency backgrounds.
Additionally, Zhao pointed out that his crypto exchange “does not trade for profit or ‘manipulate’ the market under any circumstances.” He added that the platform “trades” in a number of situations and confirmed that its revenue is in crypto.
“Our revenues are in crypto. We do need to convert them from time-to-time to cover expenses in fiat or other crypto currencies. We have affiliates that provide liquidity for less liquid pairs. These affiliates are monitored specifically not to have large profits,” said Zhao.
It is crucial to note here that CZ mentioned for the first time in this blog that they have affiliates that provide liquidity for less liquid pairs and prohibit employees from trading in futures, and also emphasized that they have a 90-day no-day-trading rule for employees. CZ confirmed that none of the employees at the firm with knowledge of LaunchPad and other coins are allowed to trade these tokens.
As rightly pointed out by CZ in the post, Binance holds the highest number of licenses/registrations globally, and as reported earlier by Bitnation, the leading exchange re-entered the South Korean market with the acquisition of Gopax.
A crypto journalist with over 3 years of experience in DeFi, NFT, metaverse, etc. Parth has worked with major media outlets in the crypto and finance world and has gained experience and expertise in crypto culture after surviving bear and bull markets over the years.
