Brazilian Lawmaker Seeks Binance Probe over Links to Pyramid Schemes

Binance’s troubles with public authorities may be compounded in the coming days as Alfredo Gaspar, a Brazilian lawmaker, has requested that the country’s lower parliamentary house probe the cryptocurrency exchange over alleged connections to pyramid schemes in the country. Gaspar asked that Guilherme Nazar, Binance’s Country Manager in Brazil, be summoned before the chamber to testify as a witness in a Commission of Inquiry (CPI) investigation.

Lawmaker Justifies Probing Binance

According to Gaspar, Binance operates in Brazil through a representative firm, B Fintech Serviços de Tecnologia LTDA. Defending the request to summon Nazar, the lawmaker cited the media report of a pyramid scheme, Ever Operations and Investment, whose funds were held in a Binance account and blocked following a court order.

The lawmaker additionally mentioned another media report involving Brainscompany, a crypto investment management company, which blamed Binance for the delay in paying its customers in December. The media report compared the Brainscompany’s business model to that of Rental Coin, a reportedly fraudulent crypto scheme whose Founder was arrested last year.

Providing further justification for the request for the summon, Gaspar pointed to the ongoing lawsuit of the US Securities and Exchange Commission against Binance for allegedly mishandling client funds, among other allegations. He added that Binance is also facing or previously suffered regulatory crackdowns in Brazil, Japan, China, Germany and the United Kingdom.

Brazil’s SEC Investigates Binance

According to Brazilian financial publication, InfoMoney, the Securities and Exchange Commission of Brazil reopened its 2022 investigation into B Fintech in March for allegedly offering derivatives contracts to users in the country without authorization. The securities regulator told the publication it had “new facts” for the case.

However, in response Binance denied the allegation, saying it does not offer derivatives in Brazil. Nonetheless, the lawmaker listed the report as another reason for the lower parliamentary chamber to approve the summons.

“Therefore, we can deduce that Binance is entirely intertwined with the motivation of this CPI and it is essential to understand its performance in the country, its relationship with B Fintech (its official representative), as well as its connection with companies that have responded in court about harming Brazilian consumers,” Gaspar explained in Portuguese, as translated into English.

According to the Brazilian news outlet, Portal do Bitcoin, other members of the CPI will vote on Gaspar’s request to summon Binance’s head in Brazil at their next session likely to hold on June 27, 2023.

Meanwhile, Binance is reportedly being investigated by public prosecutors in Paris over the ‘illegal’ provision of crypto services before it was licensed in May last year, Finance Magnates recently reported. The crypto exchange is also being reportedly probed for ‘acts of aggravated money laundering’ and has been under investigation since February 2022.

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