It appears that regulatory authorities in the U.S. are going after crypto and related companies. The SEC is still in court with Ripple over the question of whether XRP is an unregistered security or not. Coinbase received a Wells notice from the SEC and Justin Sun and the Tron Foundation also face a lawsuit that is again served by the SEC. One of the biggest players got sued yesterday and the allegations that were made by the CFTC should not be taken lightly.

What are the allegations against Binance and how did the company respond?

Binance allegedly served U.S. customers

Binance has a registered subsidiary in the U.S. that offers spot trading. The CFTC alleges that Binance offered also derivatives trading to U.S. customers without a license. This alone constitutes a serious case but adding insult to injury, the CFTC also alleges that Binance actively helped customers to circumvent KYC procedures.

This would of course require that the company acted in bad faith knowing that Binance could potentially break the law. The CEO Changpeng “CZ” Zhao and the ex-CCO Samuel Lim are also sued by the CFTC. According to the complaint, it looks like the CFTC alleges that both knew exactly what was going on and are directly responsible for many of the alleged wrongdoings.

This also includes wash trading and trading against their customers. A practice other derivative exchanges like BitMEX have also been accused of in the past. All of this doesn’t make it easier for Binance and according to several media reports customers are leaving the exchange and withdrawing their funds.

Binance and CZ are denying the allegations

Binance and its CEO were both quick to answer and posted an official statement and another one on Twitter. According to the company, U.S. users are identified through a unique system and are expelled from the platform once they are identified.

CZ also emphasized the good relationship that the company has with law enforcement agencies around the world. He also reminded everyone that Binance is regulated in 16 countries holding the required licenses.

The accusations of trading against their own customers and market manipulation were also strictly rejected. It is worth mentioning that the CFTC brought up a civil and not a criminal complaint. However, Binance could face some serious heat in the future as it could take months or even years until the matter is settled. One possible scenario is that Binance has to pay huge fines and gets away with a slap on the wrist. This already happened with BitMEX in another lawsuit involving the CFTC. Another scenario is that the company could face more serious repercussions in the U.S. should the allegations turn out to be true.

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