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Binance and its CEO seek dismissal of CFTC complaint

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Binance and its CEO Changpeng Zhao have taken a decisive step in response to the complaint filed against them by the U.S. Commodity Futures Trading Commission (CFTC). According to a court filing made on Thursday, the world’s largest cryptocurrency exchange and its CEO are seeking to have the CFTC’s complaint dismissed.

Binance
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The CFTC had initiated legal action against Binance, Zhao, and former Chief Compliance Officer Samuel Lim in March, alleging that they had violated the Commodity Exchange Act and certain federal regulations. The regulatory body accused the exchange of operating an “illegal” exchange and having a “sham” compliance program.

One of the main arguments presented by Binance for the dismissal of the case is that the CFTC is attempting to regulate foreign individuals and corporations that are based and operate outside the United States. They cited a 2007 ruling that stated U.S. law governs domestically but does not have authority worldwide.

It is worth noting that the holding company of Binance is located in the Cayman Islands, and its CEO, Changpeng Zhao, is a Canadian citizen. The CFTC, however, claimed that Binance had been involved in offering and executing commodity derivatives transactions on behalf of U.S. persons since at least July 2019, which would be in violation of U.S. laws.

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In response, Binance asserted that starting from June 2019, it had implemented measures to restrict and off-board potential U.S. users and ensured that new users were not U.S. persons. The company also emphasized that the alleged digital asset derivative products were not offered until July 2019 and later, which was after the implementation of these restrictions.

Meanwhile, Samuel Lim, the former Chief Compliance Officer, has filed a separate motion to dismiss the CFTC claims against him, further complicating the legal proceedings. As of now, the CFTC has not provided any public comments on the recent motion filed by Binance and Zhao. The regulatory body is responsible for overseeing commodities and derivatives markets, including cryptocurrencies like Bitcoin.

It’s important to highlight that this is not the only legal challenge Binance and its CEO are facing. In June, they were also sued by the U.S. Securities and Exchange Commission (SEC), which accused them of operating a “web of deception.” The SEC listed 13 charges against Binance, Zhao, and the operator of its purportedly independent U.S. exchange.

As the legal battle unfolds, the cryptocurrency industry will be closely watching the outcome of these cases, as they may have significant implications for the regulatory landscape surrounding digital assets in the United States and beyond.

Binance

Binance withdrawals hit $1.9 billion in 24 hours

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Binance, the biggest cryptocurrency exchange in the world saw $1.9 billion worth of withdrawals in only one day. Regulators are closely monitoring how cryptocurrency exchanges like Binance and the now-bankrupt erstwhile rival FTX handle customer deposits.

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Image Source: taiwannews.com.tw

The U.S. Securities and Exchange Commission charged FTX founder Sam Bankman-Fried on Tuesday with defrauding investors. According to Nansen data, the $1.9 billion in withdrawals of Ethereum-based tokens represents the highest 24-hour outflow of assets since June 13 and is responsible for most of the money taken out during the previous seven days.

According to Binance CEO Changpeng Zhao, the exchange has once witnessed “some withdrawals” totaling over $1.1 billion. He then stated that the business had experienced worse days before. He tweeted, “We’re seeing the money flowing back already. We saw some withdrawals today (net $1.14b ish). We have seen this before. Some days we have net withdrawals; some days we have net deposits.”

Zhao, also known as “CZ,” claimed that after FTX’s demise in November, people had lost faith in the cryptocurrency industry. Sam Bankman-Fried, the founder of Binance’s former rival, was arrested this week in the Bahamas after being charged with a crime in the US. Early in November, FTX collapsed, sparking a surge of public calls for more regulations of the cryptocurrency sector.

Sam Bankman-Fried, the exchange’s founder, had bragged that it was the “most regulated,” yet he had established it in the Bahamas, where regulation was lax and had covertly exploited customer deposits. Attorneys for FTX said during a bankruptcy hearing that Bankman-Fried operated the exchange as a “personal fiefdom.” According to Bankman-Fried, he didn’t intentionally do anything improper.

The cost of digital coins has been falling due to worries about the industry’s state. With a year-to-date loss of more than 60%, the price of bitcoin was last going below $18,000.

However, following FTX’s stunning collapse, Binance’s company is also being scrutinized. According to unnamed sources cited by Reuters on Monday, US authorities were considering concluding its probe into Binance’s money laundering by “filing criminal charges against specific officials, including founder Changpeng Zhao.”

Bankman-Fried was charged with eight crimes, including conspiracy and wire fraud, on Tuesday in the US. US markets watchdogs have also accused Bankman-Fried of scamming investors and clients separately.

Bankman-Fried, often known as “SBF,” is a well-known figure in the cryptocurrency world who was instantly shunned after his business experienced a liquidity difficulty and declared bankruptcy last month, preventing at least one million depositors from having access to their money.

Splits among US Department of Justice officials are delaying the resolution of a protracted criminal investigation into Binance, the largest cryptocurrency exchange in the world, as per Reuters. The inquiry was launched in 2018 and is concentrated on Binance’s compliance with American anti-money laundering rules and sanctions.

As per Reuters several of the at least six federal prosecutors working the case feel that the information previously acquired supports taking serious action against the crypto exchange and charging certain officials, including the founder Changpeng Zhao, with crimes. The sources claimed that others have urged for taking the time to consider further evidence.

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Supporting Free Speech, Binance CEO invests $500 mn in Twitter

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Binance CEO Changpeng Zhao recently stated that his company had made an investment of $500 million in Twitter because he is “extremely supportive” of free speech.

free speech
Image Source: ibtimes.com

Changpeng stated that there were “very strong reasons” for investing in Twitter. With over 7 million follower count, Zhao is active on the social networking platform.

Zhao, aka CZ, revealed to a crowd at the Web Summit in Lisbon, “When we invest in a deal, we’re very comfortable if the deal goes through. We’re very comfortable if the deal doesn’t go through. We always want to get to a point where we’re in that position. Number one is that we want to be extremely supportive of free speech. Twitter is an important free speech platform.”

“I am a heavy Twitter user. I want to invest in products that are important for our industry”, said Zhao, adding that Binance intended to be a long-term investment in the company.

After months of twists and turns within and outside the courtroom, the deal to acquire Twitter was finally finalized on Thursday. After acquisition. Elon Musk fired the platform’s top executives. Zhao said that because Musk is “a pretty hard guy for me to predict,” he was “honestly” a “little bit surprised” when the deal finally closed.

Since Musk completely controls the board and decision-making in the now-private Twitter, it is unknown how actively involved minority investors like Binance might be. In the $44 billion acquisition, the majority of his co-investors include funds like Sequoia Capital, Fidelity Management, Andreessen Horowitz, and Brookfield.

In an effort to monetize the service and reduce Twitter’s reliance on advertisements, Musk announced on Tuesday that the social media network would charge $8 for its Blue service, which includes the highly desired “verified” badge. Zhao stated he agreed with the approach.

Musk appeared to have second thoughts about his dedication to cryptocurrencies as he put the Twitter deal together. The largest digital asset exchange in the world, Binance Holdings Ltd., contributed $500 million to Musk’s financing for the transaction in May and is reportedly putting together a team to investigate how cryptocurrency might benefit the social media giant.

In a string of text conversations made public as part of the dispute around the Twitter transaction, Musk initially suggested utilizing blockchain to support free expression and decrease spam on social media, only to respond later that “blockchain Twitter isn’t possible.”

Musk has a lot of issues with Twitter bots and spam, which led to a protracted court spat that placed his plans to buy the company at risk. The problem is especially crucial in the cryptocurrency industry, where spam accounts impersonate well-known individuals like Musk to spread the word about frauds involving bogus cryptocurrency giveaways.

However, some proponents of digital assets think that Twitter bots might be decreased by adopting blockchain. Musk’s desire to “authenticate all real humans” on Twitter may be promoted through an NFT passport or a blockchain-based identity verification tool.

When it comes to daily cryptocurrency trading volume, Binance is the largest crypto exchange in the world. It was established in 2017 by d developer Changpeng Zhao, who had previously built high-frequency trading software. After the Chinese government began to regulate cryptocurrencies more strictly, Binance eventually transferred its headquarters outside China.