U.S. Regulator Says That Binance Illegally Helped Americans Trade On Its Exchange

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Futures contracts require two parties to settle a transaction at a given date, while options give purchasers the right, but not the obligation, to complete a trade. Leverage allows users to borrow funds in order to take on more risk, which could increase gains or losses. In crypto, just like traditional markets, derivatives volume usually outpaces that of spot markets.

“Cz doesn’t wanna do us kyc on .com,” said Lim in a January 2019 text conversation in the complaint, referring to the exchange’s homepage for its international exchange Binance.com. Additionally, “Lim acknowledged in February 2020 that Binance had a financial incentive to avoid subjecting customers to meaningful KYC procedures, as Zhao believed that if Binance’s compliance controls were “too stringent” then “[n]o users will come.

For instance, the company’s VIP Handling Policy “instructed its personnel to “[i]nform the user that the reason why he/she cant use our www.binance.com is because his/her IP is detected as US IP. If user doesn’t get the hint, indicate that IP is the sole reason why he/she can’t use .com” [emphasis in original]. Lim flagged a passage in the VIP Handling policy for his colleagues that further explained: “We cannot teach users how to circumvent the controls.

Perhaps the most analogous case is the CFTC’s October 2020 action filed against the crypto exchange BitMEX, which invented the crypto derivatives business, and its three founders Arthur Hayes, Benjamin Delo, and Samuel Reed. That complaint is substantially similar to the one filed today against Binance in that its chief allegation is that the company targeted U.S.

Binance appears ready to pay fines. The company is “working with regulators to figure out what are the remediations we have to go through now to make amends for that,” said Binance Chief Strategy Officer Patrick Hillman to thein February. He noted that the outcome would “likely be a fine, could be more.…We just don’t know. That is for regulators to decide.”

Steven_Ehrlich God forbid anyone makes money and doesn't give uncle Sam his cut.

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