Binance responds to CFTC claims, pursues complaint dismissal

abdelaziz Fathi

Binance is gearing up to contest the Commodity Futures Trading Commission’s complaint alleging violations of the Commodity Exchange Act and related federal regulations.

According to a court filing, Binance and its founder Changpeng Zhao intend to seek the dismissal of the complaint made by the CFTC in March.  The derivatives regulator accuses the exchange of operating an “illegal” platform and running a “sham” compliance program. Binance is expected to submit its response to the CFTC’s complaint on July 27, and it plans to make a formal request for dismissal.

Earlier in April, a CFTC commissioner said the regulator hopes to find a “path forward” in its ongoing legal dispute involving Binance and its CEO, but a decision has not yet been made on whether to settle the charges or take the case to court.

The watchdog was reportedly engaged in discussions with Binance on the complaint it filed against the exchange and its executives, alleging that they solicited American investors to participate in crypto trading in violation of the law.

The CFTC official further states that they continue their conversations with Binance to describe “what we understand is potentially problematic conduct” and to give the exchange an opportunity to explain that conduct and to “help us find a path forward.”

CFTC chairman Rostin Behnam said earlier that Binance and its operatives knew for years that they were violating US securities laws, working actively to keep the money flowing and avoid compliance. He added that defendant’s emails and chats reflect that their compliance practices have been a sham.

Among other things, the CFTC accuses Binance of secretly coaching its US deep-pocket users on how to evade compliance controls in order to maximize corporate profits.

Practically speaking, the US regulators and law-enforcement agencies can’t bring criminal charges against Binance, but they can seek hefty fines and potentially ban the global exchange from registering in the US in the future.

The original investigation dates back to 2018 when Binance was asked to voluntarily hand over messages from Zhao and 12 other executives and partners on matters including the exchange’s detection of illegal transactions and recruitment of U.S. customers.

The CFTC has also been investigating Binance over whether it permitted Americans to make illegal trades and let investors buy derivatives that are linked to digital tokens. Americans are barred from purchasing such products unless the platform offering them is registered with the derivatives watchdog.

In an apparent confession of breaking laws, Binance chief strategy officer Patrick Hillmann said their business had been led by software engineers that were “unfamiliar with laws and rules written to address the risk of bribery and corruption, money laundering, and economic sanctions.” He added that Binance has been working to fill gaps in its early compliance efforts, but still anticipates regulators will impose fines for past conduct.

Read this next

Digital Assets

Bybit exits UK market ahead of regulatory changes

Bybit is suspending its cryptocurrency services for users in the United Kingdom due to impending regulations from the country’s Financial Conduct Authority (FCA).

Digital Assets

Binance argues SEC trampled authority set by Congress

Binance, Binance.US, and Changpeng Zhao have jointly filed to dismiss a lawsuit brought by the Securities and Exchange Commission (SEC) in June.


Oscar Asly replaces Rasha Gad as CEO of M4Markets Dubai

Seychelles-regulated brokerage firm M4Markets has secured a license from the Dubai Financial Services Authority (DFSA) after it has already incorporated its new subsidiary in the Dubai International Financial Center (DIFC).

Retail FX

Capital Index UK reports mitigated loss despite revenue drop

FCA-regulated brokerage firm Capital Index (UK) Limited has released its annual financial report for the year 2022.

Digital Assets

Mike Novogratz’s Galaxy Digital expands in Europe

Galaxy Digital, the New York-based cryptocurrency financial services company founded by Mike Novogratz, is expanding its presence in Europe by appointing Leon Marshall as its first European CEO.

Metaverse Gaming NFT

Turingum Partners with MarketAcross to Drive Web3 Adoption in Global and Japanese Markets

Global blockchain PR leader MarketAcross joins forces with Japanese Web3 specialist Turingum to mutually expand its market reach, aiming to fortify Turingum’s worldwide footprint and MarketAcross’s presence in the lucrative Japanese blockchain landscape.

Digital Assets

Binance to delist all stablecoins in Europe next year

During a public hearing with the European Banking Authority (EBA), an executive from Binance said that the exchange could ultimately delist stablecoins from its European platforms by June 30, 2024.

Industry News

“Unconscionable conduct”: ASIC fines National Australia Bank $2.1m for overcharging customers

NAB faces a $2.1 million penalty for unconscionable conduct, as the Federal Court rules the bank knowingly overcharged customers, and took over two years to rectify the situation.