BNB/USD: Changpeng Zhao, Binance Sued by US CFTC, BNB Token Slips
- Binance has been sued by the Commodities and Futures Trading Commission.
- The lawsuit alleges that the exchange encouraged users to use VPNs and warned customers of asset seizures.
- Binance is still the world’s largest crypto exchange, so the outcome could prove influential for the industry.
As the largest crypto exchange in the world, Binance is certainly no stranger to regulatory scrutiny. But in the US in particular, regulators are taking issue with the growing global dominance of the exchange, despite the fact that Coinbase is still the leading crypto exchange by volume in the US. This time, they’ve come under fire for their enforcement of compliance – and their token has suffered for it.
What happened?
The Commodities and Futures Trading Commission (CFTC) has moved to sue both Binance and its CEO Changpeng Zhao, for allegedly subverting US law to increase its revenue within the US. It details that the exchange allegedly instructed customers in the US to use ‘VPNs’ to conceal their location in order to access its derivatives trading service which is prohibited for users in the US. The announcement has caused Binance’s BNB token to fall by 6% since the start of the week, despite Changpeng Zhao stating that he did not believe the lawsuit fully represented the facts and that the exchange has fully cooperated with US law enforcement.
Deeper issues?
Perhaps a more significant portion of the lawsuit is the allegation that Binance’s anti-money laundering (AML) system is not effective, due to the supposed ease with which customers can conceal their identity. Regulators have taken issue with the fact that Binance US has not reported a single suspicious account to authorities since May 2022.
It also stated that the exchange would give its preferred customers ‘warnings’ if they believed a seizure of assets could be imminent for their account. The lawsuit represents the most material action the US government has taken against the exchange to date, and if consequential, it will likely have knock-on effects for the rest of the industry given its market dominance.