According to the lawsuit, some Binance employees instructed specific customers to use unauthorized VPNs. While allowing others to disregard US trading regulations by paying from locations such as the British Virgin Islands and the Netherlands. The establishment of these businesses is considered important.
The CTFC also charged Binance with failing to register as a futures commission merchant, overseeing its operations, and putting in place routine procedures to catch customer money laundering. These are a few of the additional offenses alleged by the CTFC against Binance. implies failure.
The founder and CEO of Binance, ChangPeng Zhao, is currently accused of violating United States law by concealing his ownership of the company and prioritizing his own interests over others.
This is the first significant legal action brought against the crypto company by US federal commodities regulators since BitMEX was fined $100 million in 2021 for operating an unauthorized overseas derivatives trading market.
What is a crypto derivative?
The CTFC (Commodity Futures Trading Commission) in the US has strict regulations regarding cryptocurrency derivatives trading, which is completely banned in some other countries such as the UK. Regulators believe these trades are easily manipulated and not suitable for everyday investors. To buy crypto derivatives in the US, there are a number of safeguards that must be in place, including investor protection and strict regulations to prevent money-laundering risks.
A 2021 Wall Street Journal report stated that US investors often flout CFTC rules by using VPNs to access cryptocurrency markets in other countries.
According to the CFTC lawsuit, “Binance instructed US customers to circumvent such controls by using a VPN to hide their real location.” It is widely known that customers use VPNs to access and trade on Binance's platform, and Binance has been aware of this for some time and has supported VPN use by US customers.
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