The United States has taken regulatory action against Binance by filing a lawsuit, which some experts speculate could lead to the end of the crypto exchange in the US.
While Binance has previously been able to navigate past regulatory hurdles, its US operations have come under scrutiny by multiple US regulatory agencies, with some investigations dating back to 2018.
The US Commodities Futures Trading Commission (CFTC) filed a lawsuit against Binance, as well as CEO Changpeng Zhao and former chief compliance officer Samuel Lim, accusing the company of violating US derivatives laws by offering derivative trading services to US customers without registering with the appropriate market regulators.
The CFTC has demanded a ban on Binance, Zhao, Lim and all affiliates from trading on registered entities, as well as returning trading profits, revenues, commissions and fees derived from US customers, paying civil penalties, and standing a jury trial on the matter.
The lawsuit cites internal chat records between Zhao and Binance’s executives as evidence, leading some experts to speculate that the suit could seal the fate of the global crypto exchange in the US.
David Waugh, managing editor of the Daily Economy at the American Institute for Economic Research, notes that the CFTC lawsuit is not surprising, given the US government’s approach to cryptocurrency enterprises, which aims to curb the industry’s expansion.
He speculates that regulatory action could prompt Binance to increasingly shift its business operations beyond the US, leading to a decline in domestic trading volume unless traders transition to alternative platforms.
The lawsuit mentions Binance.US trading subsidiaries Merit Peak as well and alleges that Zhao directly controls Binance and all of its connected companies, as well as Trust Wallet, Binance Labs (due to US exposure), and many Binance employees with US exposure.
The lawsuit has been seen by some as critical for Binance’s future in the US, with some classifying it as a political move among regulators. Others speculate that the penalties demanded by the CFTC could be business-ending for Binance.
Terrence Yang, a Harvard Law JD and the managing director of Bitcoin-focused firm Swan Bitcoin, suggests that it seems unlikely that Binance.US will continue to operate much longer, depending on what the CFTC proves in court.
However, Binance CEO Zhao released a public response to the lawsuit in which he claims that the complaint contains an incomplete recitation of the facts, and they “do not agree with the characterization of many of the issues alleged in the complaint.”
The CFTC has previously gone after large companies, with regulatory enforcement actions against Tether and Bitfinex leading to major shifts in the crypto landscape.
The lawsuit against Binance looks to be no different. While some experts speculate that Binance could overcome this latest regulatory hurdle, others believe that this lawsuit could mark the end of Binance’s operations in the US, and the company may increasingly shift its business operations beyond the US.
Binance CFTC Lawsuit
In Summary the regulatory action taken by the US against Binance in the form of a lawsuit could have significant consequences for the crypto exchange’s future in the country. The US Commodities Futures Trading Commission has accused Binance of violating US derivatives laws and demanded significant penalties.
Some experts believe this could lead to the end of Binance’s operations in the US and a shift in business operations to other countries. However, Binance CEO Changpeng Zhao has disputed the allegations made in the complaint.