Binance Holdings Ltd., the world's largest cryptocurrency exchange, and its CEO Zhao Changpeng have been sued by the US Commodity Futures Trading Commission for allegedly violating trading and derivative rules
Binance Holdings Ltd., the world's largest cryptocurrency exchange, and its CEO Zhao Changpeng have been sued by the US Commodity Futures Trading Commission for allegedly violating trading and derivative rules. Samuel Lim, former legal secretary of Coin An, has also been charged.
CFTC filed a lawsuit in the Chicago Federal Court on Monday.
The recent turmoil in Coin An has been ongoing, with the spot market only experiencing a suspension of trading a few days ago and now there is a regulatory crisis.
CFTC sues Coin Security: Regulatory Arbitrage
CFTC has announced a civil lawsuit to the Northern District Court of Illinois in the United States, accusing Zhao Changpeng and his three operating entities of repeatedly violating the Commodity Exchange Act (CEA) and CFTC regulations. CFTC also accused Samuel Lim, former legal secretary of Coin An, of aiding and abetting Coin An's violations.
The accused entities include Binance Holdings Limited, Binance Holdings (IE) Limited, and Binance (Services) Holdings Limited (collectively referred to as Binance, Coin On)
Coin An intentionally operates exchanges and other related company businesses as an opaque joint venture, and uses Zhao Changpeng as the owner and CEO of Coin An. CFTC stated that the defendant disregarded CEA regulations and systematically regulated arbitrage to seek commercial benefits.
CFTC sues Coin Security: demands permanent ban on transactions, no operational base, and no obstruction to law enforcement
CFTC is seeking "confiscation of illegal gains", "civil fines", "permanent trading and registration bans", and has recently proposed a permanent ban on violations.
Even claiming to have no operating base cannot prevent CFTC from protecting US investors. CFTC will use all its powers to organize misconduct in the digital asset market, "CFTC said
CFTC Chairman Rostin Behnam stated that for many years, even if Coin On became aware of their violation of CFTC regulations, they continued to operate and avoided compliance. This will be a warning to everyone in the digital asset world, and the CFTC will not tolerate anyone evading US laws.
CFTC sues Coin An: Coin An's efforts to comply are all illusions
CFTC stated that Coin An deliberately evaded US regulation. The internal emails and chat records of Coin An indicate that Coin An's so-called 'efforts to comply' are fraudulent, and Coin An has repeatedly deliberately prioritized its interests over legal compliance.
The CFTC Law Enforcement Director stated that the CFTC will pursue digital asset platforms and individuals who flout CFTC requirements.
Coin An Zhao Changpeng Signal Connection Record Revealed: With US Users
CFTC accused Zhao Changpeng of agreeing to the public relations communication message of Coin An that there are no Coin An users in the United States. According to the Signal communication records obtained by CFTC, "It's not about Binance blocking American users, because our public position is that we have never had any American users. Therefore, we have never targeted the United States. We have never had American users
But CFTC stated that at the June 9, 2019 meeting, Zhao Changpeng stated, "20% to 30% of our traffic comes from the United States
CFTC sues Coin Security: evading compliance for US VIP customers
CFTC stated that since July 2019, Coin On has continued to provide derivative transactions to US citizens. However, the compliance plan of Coin An has not been effective. Under the guidance of Zhao Changpeng, Coin An guides its employees and customers to bypass compliance controls in order to obtain the best interests of the enterprise.
CFTC stated that during the period of being charged, Coin On did not require customers to KYC before trading, but it is classified as a futures commission merchant (FCM) under CFTC's definition and has an obligation to collect relevant information to achieve anti money laundering and anti terrorism measures.
Despite claiming to limit transactions with US clients, Coin An still provides VIP clients in the United States with methods to evade compliance; And operate unregistered derivative trading markets.
CFTC accuses Coin An of using the software Signal, which automatically removes communication, to communicate with US clients about evading compliance issues in order to avoid leaving evidence. This also proves their efforts to acquire American users.
CFTC accuses Qian An, Zhao Changpeng, and former Chief Justice of conspiring against the law
The CFTC accused Coin An, Zhao Changpeng, and former Legal Secretary Samuel Lim of engaging in activities outside the United States to evade CFTC regulation. Zhao Changpeng is based on his control over dozens of related enterprises in Coin An, as well as his long-term lack of responsibility for Coin An's violations; Former Legal Secretary Samuel Lim was promoting the use of innovative methods to evade compliance for Coin An clients, guiding US clients to use VPN to evade Coin An's control over IP addresses, and even using offshore shell companies to evade Coin An's KYC monitoring.
CFTC Accuses Coin An Zhao Changpeng of Manipulating the Market
CFTC accuses Coin An of having over 300 proprietary accounts with market makers MeritPeak and SigmaChain for proprietary trading without adopting reasonable anti fraud/anti manipulation procedures.
CFTC discusses asset categories: BTC and ETH are both commodities
In the CFTC's litigation document against CFTC, it is clearly stated that BTC, ETH and LTC (Litecoin) are all commodities rather than securities.
This statement shows that the CFTC and SEC have different classifications for the same asset, and Coinbase's legal secretary, Paul Grewal, took the opportunity to ridicule this: "Securities can obviously be a commodity, only at a specific time they are not. It depends on which regulatory agency you ask and at what point in time. If you are confused about this, then you are not alone. Is this really the most suitable American law that can be provided
CFTC sues Coin An: BNB and BTC are in decline
After the news was sent, the prices of BNB and BTC rapidly declined. Before the deadline, BNB was $309.97, a decrease of nearly 5.9% in 24 hours, while Bitcoin was $27024.29, a decrease of 3.6% in 24 hours.
After CFTC sued Coin An, a large amount of stable coins were withdrawn
According to DeFiLlama statistics, there was a significant outflow of stable currency in Coin On on March 27th:
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