CFTC Sues Binance for “Willful Evasion of Federal Law; CEO Unfazed

investopedia.com:

The Commodity Futures Trading Commission filed suit Monday against Binance CEO Changpeng Zhao (CZ) and three entities that operate the Binance platform, charging them with numerous violations of the Commodity Exchange Act (CEA) and CFTC regulations.

In its complaint, the derivatives regulator said Binance failed to comply with its obligations by not registering properly. As part of the complaint, Binance's former compliance officer, Samuel Lim, is charged with aiding and abetting Binance's violations.

The CFTC has been investigating Binance since at least 2021 for failing to prevent U.S. residents from buying and selling crypto derivatives. Platforms that let Americans trade these products must normally register with the CFTC.

In the complaint, the regulator accused Binance of deliberately disregarding CEA provisions while engaging in a calculated strategy of regulatory arbitrage. The CFTC is seeking a permanent injunction against further CEA and CFTC violations, disgorgement, and civil monetary penalties. 

“For years, Binance knew they were violating CFTC rules, working actively to both keep the money flowing and avoid compliance," the regulator said in a statement. «This should be a warning to anyone in the digital asset world that the CFTC will not tolerate willful avoidance of U.S. law.»

The CFTC also alleged Binance advised its U.S. customers to use VPN services in order to circumvent restrictions on U.S.-based customers.

“Defendants’ alleged willful evasion of U.S. law is at the core of the Commission’s complaint against Binance. The defendants’ own emails and chats reflect that Binance’s compliance efforts have been a sham and Binance deliberately chose—over and over—to place profits over following the law,” said