Binance, CEO Sued by US Derivatives Watchdog for Violations
Comment of the Day

March 27 2023

Commentary by Eoin Treacy

Binance, CEO Sued by US Derivatives Watchdog for Violations

This article from Bloomberg may be of interest to subscribers. Here is a section: 

The agency said that Zhao, Lim, other senior managers failed to properly supervise Binance’s activities and took steps to violate US laws, including instructing American customers to use virtual private networks, or VPNs, to obscure their location and directing “VIP customers” with US ties — often institutional market participants — to open Binance accounts under the name of shell companies. 

In its complaint, the CFTC also said Binance’s own documents for the month of August 2020 showed that the platform earned $63 million in fees from derivatives transactions, and that about 16% of its accounts were identified as being held by US customers.

The CFTC alleged that the company intentionally destroyed documents. At the same time, Binance makes frequent use of the encrypted messaging app Signal to communicate with US customers, at Zhao’s instruction, the agency said.

Since at least 2021, the CFTC has been probing Binance over whether it failed to keep US residents from buying and selling crypto derivatives. CFTC rules generally require platforms to register with the agency if they let Americans trade those products.

Eoin Treacy's view

I had an interesting conversation over the weekend with a former crypto exchange employee. He reported that most people are in the space to make money and the primary focus on venture capital is to come up with the next Ethereum killer. Solana’s success in doing just that has sparked a great deal of investment in trying to repeat the feat. That diversifies talent across a large number of ventures while bitcoin continues to attract a broad swathe of purists who continue to work on applications. 

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