Binance probed by CFTC over US resident ‘unregistered’ derivative trading

Mar 14, 2021 Binance, derivatives
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Binance Probed by CFTC Over US resident 'unregistered' derivative trading

Binance Holdings Ltd., the largest cryptocurrency exchange, is being investigated by the Commodity Futures Trading Commission over concerns that it allowed Americans to place wagers that violated U.S. rules, according to people familiar with the matter.

The CFTC is seeking to determine whether Binance, which isn’t registered with the agency, permitted U.S. residents to buy and sell derivatives that the regulator polices, said the people, who asked not to be identified because the probe is confidential. Binance, which has an office in Singapore but says it lacks a single corporate headquarters, hasn’t been accused of misconduct and the investigation may not lead to an enforcement action.

The scrutiny is the latest sign that market watchdogs may thwart the crypto industry’s ambitions of becoming more mainstream for U.S. investors. The CFTC considers virtual currencies like Bitcoin and Ether to be commodities and claims jurisdiction over their futures and other derivatives. That means crypto platforms face strict customer protection and oversight demands if Americans are trading on them — regardless of where exchanges are based.

Binanance co-founder Changpeng Zhao said Friday that the company closely follows American rules and has strong controls to prevent its customers from laundering funds. Speaking during an event on the social media platform Clubhouse, he declined to comment on whether the CFTC is investigating Binance.

“We’ll continue to improve our compliance,” Zhao said. “We’ll also work very actively with regulators around the world to improve the compliance standards of the industry.”
Binance said in an earlier statement Thursday that it blocks U.S. residents from its website and uses advanced technology to analyze deposits and withdrawals for signs of illicit transactions. Binance takes its compliance obligations “very seriously,” the company said. The CFTC declined to comment.

Bitcoin fell after news of the Binance investigation was reported. It was down 1.6% to $56.685.02 as of 4:17 pm New York time.

Source – Bloomberg  News

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