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The CEO of the largest online exchange for trading cryptocurrency, Binance, said he is establishing a recovery fund to help people in the industry, while saying the sector “will be fine.”
Ben McShane / Contributor / Getty Images
The Commodity Futures and Trading Commission filed a complaint against crypto exchange Binance and its co-founder, Changpeng Zhao, in Illinois federal court Monday, alleging that Binance actively solicited U.S. users and subverted the exchanges own “ineffective compliance program,” according to a court filing.
The filing has the potential to upend the exchange’s operations and is potentially just the first salvo in a regulatory crackdown on the world’s largest crypto exchange. Just days prior to the CFTC filing, CNBC reported on how Binance employees worked to subvert the exchange’s compliance controls in China.
The regulator alleged that Binance, Zhao, and his former top compliance officer, Samuel Lim, violated eight core provisions of the Commodity Exchange Act, including laws that require controls “designed to prevent and detect money laundering and terrorism financing.”
Zhao and his former top compliance officer, Samuel Lim, allegedly “actively cultivated lucrative and commercially important ‘VIP’ customers, including institutional customers, located in the United States,” the complaint said.
Binance and Zhao took steps to purposefully obscure where the exchange’s subsidiaries were located, the regulator said. This was part of a larger strategy that Zhao said was an effort to “keep countries clean,” the regulator alleged in the filing.
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