Binance Intentionally Broke CFTC’s Rules: Chair Rostin Behnam
Rostin Behnam, the chairman of the United States Commodities Futures Trading Commission (CFTC), has accused the world’s largest cryptocurrency exchange Binance of intentionally violating the agency’s rules, as it is clear that the exchange had to register its products and offerings.
Binance Intentionally Offered Products to US Customers
According to a Bloomberg report, Chair Behnam commented on the CFTC’s recent case with Binance during an event hosted by Princeton University. The chairman reprimanded the crypto exchange over its compliance with US futures and derivatives regulations, suggesting that the platform knowingly allowed US users on its platform.
The commodities regulator recently filed a lawsuit against Binance for a list of alleged violations, including the operation of an illegal derivatives exchange and willful evasion of federal laws. The case was filed at the US District Court for the Northern District of Illinois on March 27, with Binance CEO Changpeng Zhao (CZ) and the exchange’s former compliance officer Samual Lim, also mentioned as defendants.
The CFTC accused the defendants of committing multiple violations of the Commodity Exchange Act (CEA) and engaging in a strategy of regulatory arbitrage for their commercial benefit.
The complaint alleged that Binance offered unregistered crypto derivative products to US-based VIP customers, despite laws restricting them from using the platform. The agency accused Binance of enabling such users to evade compliance rules by instructing them to conceal their locations using virtual private networks (VPNs).
Behnam Reiterates That Ether is a Commodity
Overall, the CFTC charged Binance, CZ, Lim, and affiliated entities with seven counts, including failure to register as a Futures Commission Merchant (FCM), failure to supervise diligently or implement anti-money laundering and know your customer (AML/KYC) measures, provision of illegal commodities options, and law evasion.
The agency sought civil monetary penalties, disgorgement, permanent trading and registration bans, and a permanent injunction against further CEA and CFTC regulations violations.
“These are not unsophisticated individuals. They are starting large companies and offering futures contracts and derivatives to US customers,” Behnam said at the Princeton event.
The CFTC chair insisted that if a company chose to offer futures contracts in the US, there was a clear understanding that they had to register with the agency and comply with its rules.
Meanwhile, CFTC Chair Behnam restated that Ether, the second largest cryptocurrency and native token of the Ethereum network, and stablecoins are commodities.