On Friday, Rostin Behnam, chairman of the Commodity Futures Trading Commission (CFTC), commented on the regulator’s ongoing case against Binance. Binance was founded in 2017 and is currently the world’s largest crypto exchange.
Speaking at a fireside chat that took place at the DeCenter Spring Conference at Princeton University, the CFTC chair said that Binance’s management knowingly operated outside of U.S. laws governing the exchange of commodities and futures.
As per media reports, Behnam told the audience that Binance leaders had intentionally defied the federal rules concerning operations. The actions include knowingly allowing American citizens to participate in the exchange through the use of virtual private networks (VPNs) and other obfuscation tools.
The CFTC chair refers to the Binance management as “unsophisticated individuals” and says that “they are starting large companies and offering futures contracts and derivatives to U.S. customers.” He adds:
If you are going to offer futures contracts in the U.S. there is a clear understanding that you are registered with the CFTC and comply with the law.
Behnam’s recent comments targeting Binance come in light of the recent lawsuit against the company by the regulator. The regulator has charged Binance and its CEO Changpeng “CZ” Zhao for alleged trading violations.
Sources reveal that the CFTC is pressing seven counts for executing unregistered futures transactions, providing illegal commodities options, failure to register as a Futures Commission Merchant, Designated Contract Market or Swap Execution Facility, failure to supervise diligently or implement AML/KYC measures and law evasion.
However, CFTC is not the only problem the firm has to tackle. The exchange also faces legal action from the IRS and federal prosecutors. The lawsuit relies on supposed evidence that Binance and its CEO continued onboarding customers despite a policy prohibiting such actions and that the company knowingly engaged in illegal futures trading, allegedly running the business afoul of U.S. anti-money-laundering laws.
Binance, for its part, continues to assert its participation in good-faith efforts at global compliance and expressed disappointment with the regulator’s actions.
While the regulators in the US have been cracking down on crypto entities, it is important to note the tussle and lack of clarity between the regulators. In February, the Securities and Exchange Commission(SEC) targeted Paxos for BUSD, referring to it as an unregistered security. Now, the same BUSD has come under CFTC’s radar claiming it to be a commodity.
All of this highlights the dire need for clarity in the crypto regulations in the US as reiterated by lawmakers, investors, and regulators countless times. In the DC Blockchain Summit, Summer Mersinger, CFTC commissioner, highlighted the importance of interference from Congress to ensure cooperation with the CFTC when drafting crypto legislation.