Clash of the titans

The world’s leading crypto exchange by volume, Binance, alongside its CEO, Changpeng Zhao, and ex-Chief Compliance Officer, Samuel Lim, are being sued by the US Commodity Futures Trading Commission (CFTC). 

The lawsuit claims that the crypto exchange went against the US derivatives laws by offering its trading services to US clients without registering with the relevant market regulators, the CFTC included. The independent agency further accused Binance of prioritising profits over regulatory compliance. Besides the crypto exchange, the CFTC is also suing Zhao and Lim, who have both been accused of violating various rules of the Commodities Exchange Act. 

While this isn’t the first running that Binance is having with different regulatory bodies in the US, the CFTC case is the first where the exchange is being sued in all earnest. The CFTC is also pushing for a ban on Zhao, Lim, and its associates from ‘trading on registered entities, holding any commodity interest, registering or exempting with CFTC or acting as a principal, officer, or employee of a registered entity’. 

While Binance’s current fate in the US markets is uncertain, its token BNB and Bitcoin took a dip following a rumour that spread around an arrest warrant for Zhao. While the rumours turned out to be just that – Binance CEO CZ believes it was intentionally stirred by a rival exchange – it’s clear that the case at hand is showing that the US is serious about protecting US investors by enforcing its laws, even against the most potent crypto players. Depending on what the CFTC can prove in court, Binance’s operations in the US might cease. 

That the tides might be turning for exchanges in the US is also indicated by Bittrex’s recent announcement. The exchange, which was once one of the biggest exchanges in the United States, has been forced to close its operations following massive drops in its trade volumes due to regulatory issues. Representatives of Bittrex say that, ultimately, Uncle Sam is to blame for creating an unfavourable regulatory environment

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