- Binance is accused of “sham” compliance with US derivatives regulations
- The IRS is looking at its compliance with anti-money laundering provisions
Rostin Behnam, chairman of the Commodity Futures Trading Commission (CFTC), has addressed Binance with sharp criticism over its incompliance with US laws. Last month, the regulator filed a lawsuit against Binance and its CEO over a host of alleged violations.
On Thursday, Behnam said Binance did not employ “unsophisticated” people. At an event hosted by Princeton University, which was covered by Bloomberg, he added that those people were starting large companies and offering US users futures contracts and derivatives.
“Sham” compliance
The watchdog accused the world’s biggest crypto exchange by trading volume of “sham” compliance with US derivatives regulations in what has been among the most significant moves by the US government to crack down on a crypto company.
The regulator alleges that Binance did not register with it and signed up American users despite promising not to do so.
The chairman of the regulator also claims Binance intentionally broke CFTC rules by making futures contracts available in the US.
Binance is on the IRS radar
The CFTC is far from the only government organ scrutinizing Binance’s activities. Federal prosecutors and the Internal Revenue Service have been looking at its purported compliance with anti-money laundering provisions. The Securities and Exchange Commission (SEC) has been investigating the exchange’s alleged trading of unregistered securities.
Ether is now a commodity?
Behnam has repeatedly stated that ether, the second-largest cryptocurrency by market cap, and stablecoins are commodities.
There is general agreement among US watchdogs that Bitcoin is a commodity, but the nature of other cryptos is shrouded in mist. Some consider them securities under US law and others do not. If they were, they would be subject to the SEC’s strict investor-protection rules.
The SEC has taken a large number of measures against leading crypto exchanges. They recently reached a $30 million settlement with Kraken over its staking program.
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