U.S. Commodity Futures Trading Commission (CFTC) filed a lawsuit against Binance and its CEO Zhao Changfeng in Chicago federal court on charges of violating regulations on derivatives. U.S. federal law requires Americans to register with related agencies for platforms that can trade goods, which Binance intentionally avoided. In fact, according to the complaint submitted by the CFTC, Binance instructed U.S. customers to open a Binance account under the name of a paper company or to use a virtual private network (VPN).
In particular, the August 2020 Binance document secured by the CFTC also contains illegal circumstances. Binance has collected $63 million in commissions from derivatives transactions, with 16 percent of the derivatives accounts identified as American-owned. It is suspicious that Binance took fees from Americans in a secret way to avoid the eyes of U.S. regulators.
CFTC plans to confiscate Binance’s illegal transaction profits, as well as prevent Binance from trading digital assets through this lawsuit. In short, it will completely exit the U.S. market.
However, despite Binance’s denial of the allegations, it is unclear whether it will launch a head-on confrontation with U.S. regulators to defend the U.S. market. Binance is the world’s largest exchange, accounting for about 70% of the cryptocurrency spot market volume, but its U.S. market share is minimal, with only half of the largest U.S. exchange Coinbase. However, some predict that it will not smoothly step down from the U.S. market, which has virtually become Muju Gongsan due to FTX bankruptcy.
As Binance is establishing a solid position in markets outside the U.S., news of the U.S. authorities’ complaint does not seem to have a significant impact on the global virtual currency market. Bitcoin prices once plunged on the news of Binance Piso, collapsing the $27,000 level for the first time since the 23rd, but soon recovered to the $27,000 level by absorbing the shock.