US CFTC Sues Binance for Alleged Violations of Trading and Derivatives Rules, CEO CZ Named in Lawsuit

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US CFTC Sues Binance for Alleged Violations of Trading and Derivatives Rules, CEO CZ Named in Lawsuit

Binance, the largest cryptocurrency exchange in the world, has been sued by the U.S. Commodity Futures Trading Commission (CFTC) for violating trading and derivatives rules. The lawsuit filed in the U.S. District Court for the Northern District of Illinois named Binance CEO Changpeng Zhao and the company's former chief compliance officer, Samuel Lim, for their alleged involvement in breaking federal laws. The charges claim that Binance offered commodity derivatives transactions to U.S. residents without registering with the regulator, which is illegal.

According to the CFTC, Binance did not require its customers to provide any identity-verifying information before trading on the platform, which is a legal duty for entities functioning as futures commission merchants (FCMs). The regulator also accused Binance of failing to implement basic compliance procedures designed to prevent and detect terrorist financing and money laundering. The charges further claim that under Zhao's direction, Binance's compliance program has been ineffective.

The CFTC is seeking civil monetary penalties, permanent trading and registration bans, and disgorgement. The news has had a significant impact on the cryptocurrency market, with the entire crypto economy losing 2.94% against the U.S. dollar, and Bitcoin sinking below the $27,000 per unit range.

CFTC Chairman Rostin Behnam stated that the enforcement action demonstrates that there is no location, or claimed lack of location, that will prevent the CFTC from protecting American investors. He also warned that the CFTC will not tolerate willful avoidance of U.S. law in the digital asset world. The charges against Binance come amid growing regulatory scrutiny of the cryptocurrency market, with regulators worldwide increasingly seeking to impose stricter rules and regulations on the industry.

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