The Commodity Futures Trading Commission (CFTC) has filed a civil enforcement action against Changpeng Zhao, owner and CEO of Binance, and three affiliated entities – Binance Holdings Limited, Binance Holdings (IE) Limited, and Binance (Services) Holdings Limited – in the U.S. District Court for the Northern District of Illinois. The complaint alleges numerous violations of the Commodity Exchange Act (CEA) and CFTC regulations. Samuel Lim, Binance’s former chief compliance officer, is also charged with aiding and abetting these violations.
The CFTC alleges that Binance operated its centralized digital asset trading platform through a deliberately opaque network of corporate vehicles, with Zhao at the helm. The complaint claims Binance knowingly disregarded U.S. regulations while strategically seeking to profit through regulatory arbitrage. Specifically, Binance is accused of offering and executing commodity derivatives transactions to U.S. persons since July 2019 without proper compliance measures.
The agency is seeking disgorgement of ill-gotten gains, civil monetary penalties, permanent trading and registration bans, and a permanent injunction against further violations. CFTC Chairman Rostin Behnam stated the action demonstrates the commission’s commitment to protecting American investors regardless of location, and warned against willful avoidance of U.S. law in the digital asset market.
According to the complaint, Binance’s compliance program was ineffective and, at Zhao’s direction, employees and customers were allegedly instructed to bypass compliance controls to maximize profits. For a significant period, Binance reportedly did not require customers to provide identity-verifying information, failing to meet the legal requirements for entities functioning as futures commission merchants (FCMs). Internal communications cited in the complaint suggest Binance prioritized profits over legal compliance, with evidence of deliberate attempts to circumvent regulatory requirements.
Gretchen Lowe, CFTC’s Enforcement Division Principal Deputy Director and Chief Counsel, emphasized that the CFTC will pursue digital asset platforms and individuals who intentionally circumvent regulatory requirements. The case underscores the agency’s focus on addressing illegal operations within the rapidly evolving digital asset space.
Source: CFTC.gov
Related Federal Cases
- Letitia James Defends Law Firm Against Trump Retribution, New York,… · New Mexico
- Google Found Guilty of Antitrust Violations, New York NY, 2023 · Washington
- Joe Biden Criticized for Wildfire Response, Maui HI, 2024 · Illinois
- Rico Tomas Garcia, Hand Sanitizer Scam, CO, 2023 · Washington
- Michael Jett Sentenced to 23 Months for Tax Evasion, MO, 2023 · Illinois
MORE FEDERAL CRIME NEWS
US NewsUS NewsUS NewsUS News