Binance Case Is Clear Evasion of Law, Says CFTC Chair Behnam

The CFTC on Monday filed suit against the crypto exchange and CEO Changpeng Zhao.

AccessTimeIconMar 28, 2023 at 2:46 p.m. UTC
Updated Mar 28, 2023 at 5:21 p.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global event for everything crypto, blockchain and Web3.Register Now

There was clear documentation of Binance's intent to evade the law, said U.S. Commodity Futures Trading Commission (CFTC) Chair Rostin Behnam in a CNBC appearance on Tuesday.

The CFTC on Monday sued Binance and CEO Changpeng Zhao, alleging they knowingly offered unregistered crypto derivatives products. The regulator is charging the exchange and its founder with allegedly violating laws against offering futures transactions, failing to register as a futures commissions merchant and poorly supervising operations, among other things.

"This seemed to be a pretty clear case of evasion and something that we needed to step in aggressively with and do it as quickly as possible because this was an ongoing fraud – going back to 2019 – and ongoing violation of the Commodity Exchange Act," Behnam told CNBC.

“We feel pretty confident in this case, obviously something that we care about deeply and that we've been on top of for several years in this crypto space,” Behnam added.

Court documents filed on Monday contained internal chats from Binance, including one from Samuel Lim, the exchange’s chief compliance officer through January 2022. “On the surface we cannot be seen to have U.S. users but in reality we should get them through other creative means," Lim allegedly said.

Behnam also referred to charges that there was clear communication from Binance to clients encouraging them to use virtual private networks (VPN) to conceal their true location in order to access global markets online.

“Not having a headquarters, not having a location is not going to prevent the CFTC from coming after you,” Behnam told CNBC.

In a blog post on Monday, Zhao called the lawsuit "an incomplete recitation of facts," though he didn't directly address any of the allegations.

Edited by Stephen Alpher.




Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

Camomile Shumba

Camomile Shumba is a CoinDesk regulatory reporter based in the UK. She previously worked as an intern for Business Insider and Bloomberg News. She does not currently hold value in any digital currencies or projects.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.