news Binance is currently under investigation by US-based CFTC

[kyoukage01 3181]

Spoiler

Binance Probed by CFTC Over Whether U.S. Residents Traded

Benjamin Bain, Tom Schoenberg, Matt Robinson

 

 

Binance Holdings Ltd., the largest cryptocurrency exchange, is being investigated by the Commodity Futures Trading Commission over concerns that it allowed Americans to place wagers that violated U.S. rules, according to people familiar with the matter.

 

The CFTC is seeking to determine whether Binance, which isn’t registered with the agency, permitted U.S. residents to buy and sell derivatives that the regulator polices, said the people, who asked not to be identified because the probe is confidential. Binance, which has an office in Singapore but says it lacks a single corporate headquarters, hasn’t been accused of misconduct and the investigation may not lead to an enforcement action.

 

The scrutiny is the latest sign that market watchdogs may thwart the crypto industry’s ambitions of becoming more mainstream for U.S. investors. The CFTC considers virtual currencies like Bitcoin and Ether to be commodities and claims jurisdiction over their futures and other derivatives. That means crypto platforms face strict customer protection and oversight demands if Americans are trading on them -- regardless of where exchanges are based.

 

Binanance co-founder Changpeng Zhao said Friday that the company closely follows American rules and has strong controls to prevent its customers from laundering funds. Speaking during an event on the social media platform Clubhouse, he declined to comment on whether the CFTC is investigating Binance.

 

“We’ll continue to improve our compliance,” Zhao said. “We’ll also work very actively with regulators around the world to improve the compliance standards of the industry.”

Binance said in an earlier statement Thursday that it blocks U.S. residents from its website and uses advanced technology to analyze deposits and withdrawals for signs of illicit transactions. Binance takes its compliance obligations “very seriously,” the company said. The CFTC declined to comment.

 

Bitcoin fell after news of the Binance investigation was reported. It was down 1.6% to $56.685.02 as of 4:17 pm New York time.

 

The investigation adds to the U.S.’s growing crackdown on crypto. The CFTC has already sued BitMEX for failing to register as a broker, with the exchange’s market share declining since it became a target of regulatory scrutiny. Coinbase Global Inc., the U.S.’s biggest crypto exchange, also disclosed last month that it’s responding to a wide-ranging CFTC probe. Investors from around the world have flocked to exchanges like Binance and BitMEX because of the extreme levels of leverage that customers can employ while trading.

 

Separately, the U.S. Treasury Department is considering new rules that would force banks to record the identities of those who invest in virtual assets. While advocates say the move would crack down on money laundering and other illegal activities, Bitcoin holders argue it would undermine a key draw of cryptocurrencies: the ability to send funds without government oversight.

 

An enforcement action against Binance, which has become emblematic of crypto’s meteoric rise, would be the highest-profile CFTC case tied to digital tokens. Zhao, the Binance co-founder who goes by CZ, regularly promotes the asset class on television and social media, saying it has helped make him a billionaire.

U.S. Entity

In 2019, Binance established San Francisco-based Binance.US, which Zhao has said is an independent entity for American customers that is registered with Treasury’s Financial Crimes Enforcement Network and holds several state licenses. Still, he has acknowledged that improper trades may be slipping through the cracks.

 

“We have always blocked U.S. access, but users do find intelligent ways to get around our block sometimes and we just have to be smarter about the way we block,” he said in a November interview with Bloomberg.

 

Ex-U.S. Senator Max Baucus, who Binance just tapped to advise it on policy and government relations, said the exchange is assessing whether to register with the CFTC. In a Bloomberg TV interview, Baucus called such a move a “business decision,” while adding that what’s most important to him is that he’s confident the company is already abiding with relevant rules and laws.

 

Bitcoin’s surge past $50,000 has been a boon for Binance, as the exchange is raking in new users faster than ever. The crypto behemoth has been attracting more than 300,000 user registrations a day, exceeding its previous peak reached in 2017, Zhao told Bloomberg TV last month.

 

In the U.S., that kind of growth often attracts attention from regulators and law-enforcement agencies that are concerned about illegal trading, manipulation, money laundering and sanctions violations.

Government Charges

In October, the CFTC sued Seychelles-based BitMEX in federal court for allegedly letting Americans trade crypto derivatives and not registering with the agency as a brokerage, among misconduct. BitMEX’s founders were separately charged criminally by the Justice Department with violating U.S. laws meant to prevent money laundering, a claim also made by the CFTC.

 

In a statement after the actions were filed, BitMEX said it strongly disagreed with the accusations and that it has always sought to comply with U.S. laws. One defendant pleaded not guilty, while two others are negotiating with prosecutors to make court appearances. The status of the fourth defendant couldn’t be determined.

 

Binance’s corporate structure is unusual. Zhao said in an interview this month that the company consists of a number of entities spread around the world. Among those asking questions about the firm’s compliance with rules is Coinbase. In documents recently filed with the U.S. Securities and Exchange Commission ahead of a planned initial public offering, Coinbase said it competes with firms with “varying degrees of regulatory adherence, such as Binance.”

source: https://www.bloomberg.com/news/articles/2021-03-12/crypto-exchange-binance-investigated-by-u-s-over-who-s-trading

 

In a latest series of harassments investigations of governments into the steadily growing cryptocurrency world, a leading cryptocurrency exchange is currently under investigation by the Commodity Futures Trading Commission over whether the American citizens are being allowed to make illegal transactions into their platform or not.

 

More information can be found in the article in the spoiler above, although the focus is less on the case itself and more on its implications. No available details on the investigation can be found as of the moment.

 

Cryptocurrencies especially Bitcoin has been on the rise, the economic slump during the height of the pandemic last year being counted as one of the factors. BTC's current price of $50,000 attests to that. To that end, many cryptocurrency exchanges have witnessed growth. And with that growth comes the ever-watchful eyes of regulation committees.

 

Binance wouldn't be the first crypto exchange that is being investigated by the CFTC. Earlier, Bitmex went under their microscope as well.

 

With the way cryptocurrencies experience growth this year, governments and institutions are ever getting more strict in scrutinizing this growth. It happened with the mainstream coins such as XRP and privacy coins such as DASH. It happened with restricting crypto mining farms in certain countries. Now it happens with crypto exchanges as depicted by the news.

 

Edited March 13, 2021 by kyoukage01

[Whited35 15285]

3 hours ago, kyoukage01 said:

In a latest series of harassments investigations of governments into the steadily growing cryptocurrency world, a leading cryptocurrency exchange is currently under investigation by the Commodity Futures Trading Commission over whether the American citizens are being allowed to make illegal transactions into their platform or not.

I think investigation can detect the participating U.S. citizens using the Binance as they would have been using the VPN to access the platforms by keeping identity secured. Binance also does not require KYC for the small asset traders and it can be the remarkable faults to allow violators to get service secretly. Binance itself has so many problems specially during the high traffic time, they have been repeatedly facing the challenges to solve the scalability problems and all things could be responsible to secretly allow U.S. citizens to use platform even now. 

[kryptonick 2659]

Binance has been warned against accepting US citizens, because of the derivatives trading with high leverage. Bitmex also the same years ago, but both didn't do a lot about that. Bitmex is all about derivative while Binance came on target after starting the futures trading and other derivatives. These trade rooms are very dangerous for even intermediate traders and in this trading it is 90% of traders losing money.

[Ridam 7455]

Well, CZ has also tweeted about this and I think its good to do so at some extent. AS US wants the United States Citizen to trade only in the US Version of the Binance, Its common for the US regulatory to inspect over the global version of the Binance whether they are following the guideliness or not. And there is no doubt that Binance will endure through succesfully and we won't see any disputes like before with XRP. Also In my view if Binance pass this regulatory supervision, it would gain not only huge credibility but also the support and positive response from the SEC and whole customers base too.