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The world’s largest crypto exchange, Binance, is investigated by the US Commodities Futures Trading Commission for allowing American Residents to trade by violating the laws.
According to Bloomberg's latest report, the Commodities Futures Trading Commission wants to know whether Binance is allowing the US residents to trade against the US laws. Although the agency has not impeached Binance of any misconduct and may not bring any action against the platform, it is reportedly investigating the matter.
Binance is not registered with the agency. It does not provide the services to the United States residents due to the lack of regulatory approval, i.e., US residents are not permitted to sell and buy on the platform. Binance uses a San Fransisco-based entity to serve the US customers instead of directly serving them. This entity is entirely independent for US customers, registered with the Treasury's Financial Crimes Enforcement Network. It has already announced that all the US customers would be removes from this platform as well.
According to Changpeng Zhao, CEO of Binance, the company strictly follows the US rules and can prevent the customers from laundering funds. He declined to answer whether CFTC is investigating Binance during an event on the social media platform. He added that Binance would continue to improve its compliance and work actively with the regulatory authorities to improve its standards. Binance earlier stated that US residents are blocked from its website, and it analyzes the deposits and withdrawals for the signs of illicit transactions with the help of advanced technology. During an interview in November 2020, Zhao said they need to be more competent enough about how they block the customers because users can still find intelligent ways to trade despite the blocking system.
Commodities Futures Trading Commission strictly oversees derivative trading in the US. It brought an enforcement action against BitMEX the previous year because it allowed the US residents to trade the derivative products. The US Treasury Department also considers new rules by which the banks will record the persons investing in virtual assets.
After the news of this investigation against Binance, Bitcoin immediately fell by 2%. No doubts that the surge in Bitcoin has been a boon for Binance, and it will be interesting to see whether the news will further affect the Bitcoin investors or not.