Last Updated on March 28, 2023 by Bitfinsider
Binance CEO Changpeng Zhao claimed in a blog post on Monday that a lawsuit submitted earlier in the day by the Commodity Futures Trading Commission (CFTC) had “an incomplete recitation of facts.”
Zhao also referred to the complaint as “unexpected and disappointing” and stated that “we do not agree with the characterization of many of the issues alleged in the complaint.”
According to the complaint, which was submitted to the U.S. District Court for the Northern District of Illinois, Binance ran a derivatives trading operation in the country and provided trades for a variety of cryptocurrencies, including bitcoin (BTC), ether (ETH), litecoin (LTC), tether (USDT), and Binance USD (BUSD), which the suit referred to as commodities. The lawsuit further claims that Zhao, as the company’s leader, gave orders to workers to use virtual private networks to spoof their locations.
Zhao praised the know-your-customer initiative and other compliance technology used by the industry giant.
He noted that the business had 16 licenses and registrations globally and that the exchange’s compliance teams had 750 employees, “many with prior law enforcement and regulatory agency backgrounds.”
The exchange, which has a U.S. affiliate in Binance.US, allegedly developed a system to conceal its real scope and operations.
Gretchen Lowe, chief counsel for the CFTC, referred to internal emails and chats when she described Binance’s activities as “willful evasion of U.S. law” in a press release.
Furthermore, the lawsuit claimed that Binance instructed US customers to use a number of strategies to get around the company’s ban on customers with US addresses. In order to circumvent such controls, “Binance has instructed U.S. customers to use virtual privacy networks to conceal their true location,” the lawsuit claims.
Zhao emphasized Binance’s 90-day, no-day-trading policy in his blog post, stating that staff members “are not allowed to sell a coin within 90 days of” their most recent purchases, or the opposite. This is to stop any workers from engaging in active trading. Additionally, we forbid any futures trading by our staff, Zhao added.
Zhao is accused of being the “direct or indirect owner of entities that have engaged in proprietary trading activity on the Binance platform” and the “direct or indirect owner of approximately 300 separate Binance accounts” that participated in prop trading on the Binance trading platform, according to the CFTC, which has named Zhao as a defendant.
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