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Rostin Behnam, the chairman of the Commodities Futures Trading Commission (CFTC), stated on Tuesday that Binance’s continuous efforts to dodge U.S. regulations and let U.S. citizens use the platform through the use of VPNs were part of an “ongoing fraud.” The CFTC filed a lawsuit against cryptocurrency exchange Binance and its CEO Changpeng “CZ” Zhao, saying that they knowingly marketed unregistered crypto derivatives products in the country.
Behnam Alleges Zero Compliance
In a televised interview on CNBC, the CFTC chair stated that the Binance exchange deliberately circumvented the CFTC’s registration requirements by instructing customers on how to connect to the exchange without disclosing their location in the United States. Moreover, since Binance had never registered with the commodities watchdog, it was not legally authorized to offer trading of cryptocurrency futures in the United States.
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In addition, Behnam emphasized that Binance’s lack of a registered headquarter did not allow it to evade U.S. regulations. As a matter of fact, the regulatory body was now more keen on pursuing the exchange with stricter scrutiny. While speaking about the investigation, the CFTC chief was quoted as saying:
This was an ongoing fraud dating back to 2019, an ongoing violation of the Commodity Exchange Act. This seemed to be a pretty clear case of evasion and something that we needed to step in aggressively with and do it as quickly as possible.
“We feel pretty confident in this case, obviously something that we care about deeply and that we’ve been on top of for several years in this crypto space”, Behnam further added.
Binance’s Ongoing Legal Hurdles
The court records that were submitted on Monday included internal discussions from Binance, including one from Samuel Lim, who continued to serve as the exchange’s top compliance officer until January 2022. Lim is reported to have allegedly suggested that “On the surface we cannot be seen to have U.S. users but in reality we should get them through other creative means”.
Binance and its founder Changpeng Zhao refuted the charges made by the CFTC and have shown intentions to fight the watchdog’s lawsuit, which was filed in a federal court in Chicago. At the time of writing, the price of BNB, Binance’s native cryptocurrency, was exchanging hands at $311 which represents a drop of 1% in the past 24 hours.
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