Binance CEO Calls CFTC Lawsuit “An Incomplete Recitation of Facts”

Hours after the Commodity Futures Trading Commission’s lawsuit, Binance's CEO, Changpeng Zhao publicly rejected the allegations, calling them “unexpected and disappointing” with “an incomplete recitation of facts.”

In the brief response through an official blog post, Zhao refuted all the major allegations and will be “able to give full responses in due time.”

My Response to the CFTC Complaint | Binance Blog https://t.co/TadyotM7HN

Zhao Rejects CFTC’s Allegations

“The CFTC filed an unexpected and disappointing civil complaint, despite our working cooperatively with the CFTC for over two years,” he stated. “Upon an initial review, the complaint appears to contain an incomplete recitation of facts, and we do not agree with the characterization of many of the issues alleged in the complaint.”

Binance, the largest cryptocurrency exchange in terms of trading volume, faced many regulatory setbacks in the past, including warnings and enforcement actions. However, the latest lawsuit by the US regulator is a massive blow to its dominance.

The lawsuit on Monday by the CFTC alleged that Binance violated “numerous” regulations in the country and that its compliance is a “sham.” The exchange was accused of instructing “commercially valuable US-based VIP customers.” ways of avoiding compliance controls, insider trading, and even market manipulation.

Not Trading for Profits

Zhao, in his response, highlighted that “Binance.com does not trade for profit or 'manipulate' the market under any circumstances.” He clarified that Binance often converts its earnings in crypto to fiat or other crypto assets to cover expenses.

Additionally, he disclosed that he personally has two Binance accounts, one for his Binance Card and the other for his crypto holdings. Moreover, he and other Binance employees follow a “90-day no-day-trading rule” that prohibits them from selling a crypto asset within 90 days of procuring them.

“This is to prevent any employees from actively trading,” Zhao added. “We also prohibit our employees from trading in Futures. Further, we have strict policies for anyone with access to private information, such as details of listings, Launchpad, etc. They are not allowed to buy or sell those coins.”

Serious Allegations by the CFTC

These clarifications came as the CFTC alleged that Binance traded on its own platform with 300 “house accounts” but did not disclose such activities to customers. Moreover, the exchange has been blamed for keeping this information 'top secret' and refused to provide any trading activity-related details after a subpoena.

You have to ask yourself why would a single trader need over three hundred trading accounts, to trade on Binance?Because they're wash trading and painting the tape between their accounts.They can make the prices do whatever they want. pic.twitter.com/YIF8XYSrlh

“Binance is committed to transparency and cooperation with regulators and law enforcement (LE) — in the US and globally,” Zhao stated, adding that his exchange handled over 55,000 requests from law enforcement. He even praised the compliance systems of Binance as being top-notch.

Meanwhile, Binance published a response letter recently sent to US Senators Warren, Van Hollen, and Marshall.

“Binance takes the issue of compliance very seriously, and it regularly engages with US law enforcement,” the letter stated. “The public blockchain record (on-chain analytics) of crypto exchanges means that the platform has greater transparency as compared to traditional financial institutions, making it easier to track and trace the flow of crypto assets.”

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