Commodity Futures Trading Commission (CFTC) officials have outlined a civil enforcement action charging Changpeng Zhao and three entities operating the Binance trading platform with alleged regulation violations.
The complaint filed in the U.S. District Court for the Northern District of Illinois is in regard to numerous alleged violations of the Commodity Exchange Act (CEA) and CFTC regulations. The complaint also charges former Binance Chief Compliance Officer Samuel Lim with allegedly aiding and abetting Binance’s violations.
“I have been clear that the CFTC will continue to use all of its authority to find and stop misconduct in the volatile and risky digital asset market,” CFTC Chairman Rostin Behnam said. “For years, Binance knew they were violating CFTC rules, working actively to both keep the money flowing and avoid compliance. This should be a warning to anyone in the digital asset world that the CFTC will not tolerate willful avoidance of U.S. law.”
The complaint alleges Binance Holdings Limited, Binance Holdings (IE) Limited, and Binance (Services) Holdings Limited (together, Binance) operated the Binance centralized digital asset trading platform, along with numerous other corporate vehicles via an intentionally opaque common enterprise, with Zhao at the helm as Binance’s owner and chief executive officer.
The CFTC alleges Binance chose to knowingly disregard applicable provisions of the CEA while engaging in a calculated strategy of regulatory arbitrage to their commercial benefit.
Per the CFTC, the agency seeks disgorgement, civil monetary penalties, permanent trading and registration bans, and a permanent injunction against further violations of the CEA and CFTC regulations.
The complaint charges Binance, Zhao, and Lim with alleged willful evasion of the requirements of the CEA, with Lim charged with allegedly conducting activities to willfully evade or attempt to evade applicable provisions of the CEA.