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US regulator takes Binance to court over compliance evasion

US regulator the CFTC has sued the world’s biggest crypto exchange Binance for what it describes as the “wilful evasion of US law”, alleging the exchange knowingly did business with US entities.

The US Commodity Futures Trading Commission has brought the civil suit against Binance, which is led by CEO Changpeng Zhao (CZ), for what it says were highly purposeful and sustained breaches of US financial law.

The essence of the case is the allegation that Binance, which is not permitted to do business in the US or with US citizens, actively worked to get around these restrictions, and also evaded controls designed to thwart money laundering and terrorism funding.

“For years, Binance knew they were violating CFTC rules, working actively to both keep the money flowing and avoid compliance,” said CTFC chair Rostan Behnam in a strongly worded press release.

“Binance’s compliance program has been ineffective and, at Zhao’s direction, Binance has instructed its employees and customers to circumvent compliance controls in order to maximize corporate profits,” the press release stated.

Binance hit back with an equally clear statement from Zhao, who is personally named in the suit and has been a driving force behind the exchange. The Chinese-born Canadian is currently based in Singapore.

“Binance is committed to transparency and cooperation with regulators and law enforcement (LE) — in the US and globally.”

The statement lists the ways in which Binance works to block US citizens from using its services.

“We block US users by nationality (KYC), IP (including commonly used VPN endpoints outside of the US), mobile carrier, device fingerprints, bank deposit and withdrawals, blockchain deposits and withdrawals, credit card bin numbers, and more.”

KYC stands for Know Your Customer and is a process by which banks and other financial institutions verify the identity of potential clients.

Using an expression from the development community, Zhao said “I eat our own dog food and store my crypto on” He listed the ways in which Binance ensured it did not manipulate markets and claimed “ does not trade for profit.”

“In this journey towards freedom of money, we do not expect everything to be easy. We do not shy away from challenges.”

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Polemos staff

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