The world’s largest crypto exchange Binance is said to have deliberately enabled terrorist financing and money laundering and automatically destroyed evidence. The US capital markets authority CTFC has raised these and other serious allegations in a civil lawsuit against Binance, its co-founder and boss Changpeng Zhao (“CZ”) and its former Chief Compliance Officer Samuel Lim. The CFTC (Commodity Futures Trading Commission) wants fines, Disposal of unfair profits and redress for all aggrieved customers achieve that Binance and all associated persons are no longer allowed to operate in the USA.
That’s according to a lawsuit filed Monday in the U.S. District Court for Northern Illinois (Commodity Futures Trading Commission v. Zhao, Binance et Lim , Ref. 1:23-cv-01887). The CFTC is seeking a jury trial, relying on Binance internal emails and chats, among other sources. The authority regulates trading in commodity futures, i.e. contracts for the future delivery or purchase of goods and other values, as well as the determination of indices of all kinds, with the exception of onions, and sales of cinema tickets. The CFTC also views cryptocurrencies as commodities.
Shell companies, automatic evidence destruction
The CFTC accuses Binance and its owner Zhao of having deliberately set up the Binance corporate network opaquely with the aim of evading US law. At the same time, however, Binance has been serving US customers for years – without registering the exchange, as intended, and for a long time without determining the identity of the customer (KYC, Know Your Customer). However, KYC is required to combat money laundering and terrorist financing.
Even when Binance operated its own US version of its exchange and excluded US citizens from the global platform, this exclusion was only for appearances. Zhao and Lim urged their employees to offer US customers “creative” ways to circumvent the exclusion and identity verification. These included the use of VPNs to obtain foreign IP addresses and the establishment of foreign letterbox companies. The corresponding chats with customers were set up so that the messages were automatically deleted – instead of being secured for official control as required.
Binance is the largest exchange for cryptocurrencies and related bets. The company could not be reached for comment. The CFTC seeks a finding of breach of law, fines, confiscation of profits, damages to any aggrieved customers plus interest, injunctive relief, and a permanent ban on Binance and all of its officers, employees, attorneys and partners from dealing in or dealing in any commodities or digital assets in the United States to enable trade. Third parties who have benefited from illegal Binance trading are also said to have to surrender all earnings, while all infringing contracts concluded with Binance are to be cancelled.
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