US regulators are seeking to ban Binance, the largest cryptocurrency trading platform in the world, on the grounds that it has been operating illegally in the country. According to the complaint filed by the Commodities Futures Trading Commission (CFTC), the company grew American business without registering with the required authorities.
It accused Binance of violating many US financial laws, including anti-money laundering regulations. Binance defended its business methods.
It stated that "substantial efforts" had been taken to guarantee that US users were not active on the site, including barring users who were recognised as US citizens or residents or who had a US cell number.
"This submission is surprising and upsetting, given we have been collaborating with the CFTC for more than two years," the company stated, adding that it will continue to engage with US and international regulators. They also mentioned that protecting their users and collaborating with regulators to develop a clear, well-considered regulatory regime will be the best way forward.
Established in 2017, the firm is currently the world's largest centralized exchange for digital assets, boasting more than 100 million members internationally. It is run by Canadian millionaire of Chinese descent Changpeng Zhao, who is also mentioned in the case. The CFTC claimed Binance has been operational in the US since 2019, but never officially registered with the government or followed with applicable US regulations, employing a "intentionally opaque" global company structure in an effort to dodge inspection.
Throughout a significant portion of that period, Binance did not require its consumers to give any identity-verification information prior to trading on the platform, according to the CFTC's civil case filed in Illinois federal court. The company declared in 2021 that it was strengthening its standards. CFTC also instructed US-based consumers on how to circumvent these regulations using virtual private networks (VPNs) and dummy corporations.
The firm circumvented the rules "to maximize corporate profits," according to the CFTC. It requested the US court for compensation and penalties, as well as permanent trade and registration restrictions.
Rostin Behnam, head of the CFTC, stated that the government filed the lawsuit to safeguard American investors and that it should serve as a broader warning to anyone operating in the cryptocurrency industry. He mentioned that Binance knew they were violating CFTC laws for years, and they worked aggressively to keep the money flowing and avoid compliance. This should serve as a warning that the CFTC will not tolerate deliberate violations of US law.
About the time the lawsuit was revealed, Mr Zhao wrote on Twitter a message that said "4" - seemingly directing followers back to advice in an earlier post asking them to "ignore .... false news, assaults, etc." After several years of explosive growth, the crypto industry has struggled with a sharp price decline and increased regulatory scrutiny. Officials in the United States forewarned the industry a year ago that they planned to enforce existing laws more strictly against issues such as conflicts of interest and lack of transparency.
In October, the CFTC said that over twenty percent of the actions it had pursued in the preceding year included the industry, including proceedings against Bitfinex and Tether. It is also among the agencies in the US that has initiated fraud charges against Sam Bankman-Fried and FTX, once a key rival to Binance.