Binance, the world’s largest cryptocurrency exchange, faces a potential US trading ban for allegedly facilitating accounts associated with Hamas and Russian criminals.
The Commodity Future Trading Commission (CFTC) filed a lawsuit against Binance, claiming that it attempted to bypass regulations meant to prevent money laundering while allowing Americans to conduct high-risk trades.
Following the announcement of the lawsuit, Bitcoin’s price declined by 4%, reflecting concerns that the crackdown could significantly disrupt trading.
The CFTC accused Binance and its founder, Changpeng “CZ” Zhao, of encouraging US clients to evade compliance measures and breach market rules. The CFTC’s lawsuit alleged that Binance employees made jokes about terrorists using the platform and exhibited lax regulatory oversight.
Binance’s money laundering officer also allegedly turned a blind eye to suspicious activity. The CFTC accused Binance of seven regulatory violations, including offering Bitcoin and Ethereum derivatives trading without complying with US regulations or properly registering its operations.
The lawsuit is likely to add to the crypto market’s uncertainty, following the collapse of Binance’s major rival, FTX, and its founder Sam Bankman-Fried’s indictment on fraud charges in the US.
Binance, the cryptocurrency giant, is facing increasing pressure as it confronts numerous US investigations, including a criminal case from the Justice Department. US senators accused Binance of enabling up to $10 billion in illegal financial activity and payments to criminals or in violation of sanctions.
Binance’s UK subsidiary was prevented from launching by the Financial Conduct Authority in 2021, and its auditor resigned in December. The CFTC accused Binance of secretly directing its most valuable customers to trade with its primary international division, which had fewer controls in place than its separate North American division, Binance.
The CFTC has filed legal action against Binance, alleging that it relied on a “maze of corporate entities” to conceal its true ownership, and Binance CEO Changpeng “CZ” Zhao failed to confirm the company’s true headquarters. The CFTC plans to seek permanent trading and registration bans against Binance in the US, along with an injunction preventing Binance and its executives from managing or directing digital asset trading.
Internal Binance emails and messages from the encrypted app Signal were cited as evidence, showing the company instructing US users how to access the site without alerting authorities. The regulator claimed that Binance deliberately placed profits over compliance with the law, despite pretending to have compliance controls in place.
Binance intends to continue collaborating with regulators in the US and worldwide, according to a company spokesman.
