As much as Binance—the world’s biggest cryptocurrency exchange—is growing, there is an intensifying investigation from the U.S. authorities to ensure that Binance doesn’t violate the nation’s regulatory laws. As a result, the Commodity Futures Trading Commission is investigating Binance for insider trading and market manipulation.
Binance vs. U.S. Authorities
Recently, the U.S. authorities launched another confidential probe to reveal if Binance’s staff are leveraging customers’ data for profits. The Commodity Futures Trading Commission launched this recent investigation while reaching out to some witnesses.
Binance expansion sees massive trading activity taking place on its platform. Every day, users’ transactions run across billions of dollars without government supervision. This presents the exchange with access to customer transactional information. To ensure that Binance is not using this for its profit, the U.S. agencies launched a discreet investigation.
However, Binance’s spokesperson revealed that the company has zero tolerance for insider trading and market manipulation that may cause massive danger to the crypto market and leave customers vulnerable to losing their funds.
Compliance Tussles
Binance has been known to fight compliance battles across nations wherever it finds itself operating. Some countries, aside from the U.S., ordered Binance and its affiliates to stop service provision within their nations.
Those nations pegged their order that Binance does not have the appropriate licenses to operate within their countries. They believe operating in their jurisdictions requires some regulatory compliance from Binance’s side. Some of those countries include Japan, Germany, Malaysia, Thailand, and South Africa.
The Commodity Futures Trading Commission (CFTC) and the U.S. Justice Department are probing Binance to ascertain they are not an efficient haven for individuals conducting money laundering or evading taxes. However, there may not be any legal action against Binance since the platform is yet to be accused of illegal activities. This investigation has been going on for months, and it may take some time for legal action.
While Binance is staying away from unnecessary attention from the U.S. government, federal agencies are wary of the alarming crypto market. They observed the market growth and are concerned about illegal activities perpetrated in the disguise of crypto transactions. Likewise, there is increasing concern about customer protection.
Before this recent investigation, the CFTC has been inquiring into Binance requesting information about the derivative transaction. They want to ascertain that Binance doesn’t allow transactions of derivatives linked to Bitcoin and other tokens. The CFTC findings are shared with other federal agencies as a routine.
Now, CFTC demands data and communication information from Binance. They are following a claim to reveal if Binance is trading derivatives regulated by the CFTC.
Strict Internal Regulations
Amidst all the investigative tussles, Changpeng Zhao—founder of Binance—reveals that his company has strict regulations to prevent insiders from trading or manipulate the market. To make this effective, there is a unit that issues new tokens to the exchange staff. This unit is separated from the rest of the team.
As another form of measures, their compliance team and advisory board grew to about 500% in 2020 with plans to expand to about 1000% by year’s end. Meanwhile, Zhao mentioned that Binance wouldn’t let its guard down from preventing US-based traders from accessing its exchange. Likewise, he established that his firm would keep adhering to operational procedures of countries wherein it exists.
Another case against Binance is the demand for its data servers’ location. The U.S courts wanted to be sure that the company had offices or officials located within the country. This will enable them to impose jurisdictional authority over Binance.
Meanwhile, Binance.US was incorporated as a separate entity in 2019. This exchange is created to serve the Binance crypto need or services of American clients. But concerns surround the officials investigating Binance. These officials investigated BitMEX for a regulatory case.
Would Binance Stop Operating in the U.S.?
While there is no definite statement around this, it is crucial to keep tabs on the regulatory news from the U.S. authorities toward Binance and other crypto exchanges. This is because the government keeps up continued efforts to protect its citizens’ funds by regulatory policies. Likewise, they want to ensure Binance and crypto are generally not good passages for money laundering and tax evasion.
