CFTC Chairman Russ Benham discussed Binance and its alleged intentional evasion of US law in a CNBC interview, highlighting the need for regulatory transparency.
In a recent interview with CNBC, Russ Benham, the Chairman of the Commodities Futures Trading Commission (CFTC), discussed the commission’s investigation into Binance, a leading cryptocurrency exchange. Moreover, the CFTC allegedly found that Binance had been intentionally evading US law by offering derivatives to US customers without registering with the commission as required. Benham explained that this case was crucial in sending a clear message to crypto exchanges and participants worldwide.
Binance and other cryptocurrency exchanges have previously claimed they would welcome clear regulatory paths, but the CFTC’s charges suggest more than just accidental violations. The complaint filed by the CFTC shows an orchestrated and intentional effort by Binance to evade US law. Additionally, Benham mentioned communications documented in the complaint, including discussions about using virtual private networks (VPNs) to bypass internet barriers and allow US customers to access markets across the globe.
The CFTC’s investigation revealed that various overseas entities were set up with little funding from non-US sources, implicating US control persons in a deliberate evasion of US law. Given Binance’s significant presence in the crypto market, the CFTC deemed this a critical case of evasion that demanded aggressive action. The ongoing fraud and violation of the Commodity Exchange Act date back to 2019, prompting the CFTC to act as quickly as possible.
CZ Involvement
The complaint also highlights that Binance’s evasion of US law was not the work of rogue actors but instead went straight to the top, implicating CEO Changpeng Zhao (CZ). In one exchange documented in the complaint, a VIP team member communicated with CZ about courting large US market players, with CZ advising them to avoid connecting from US IP addresses and to not leave any evidence in writing.
Benham emphasized that the CFTC is a civil enforcement agency and noted that not having a headquarters or a specific location would not prevent the commission from pursuing legal action. He further explained that the case involved dozens of entities scattered across the globe, with control persons like CZ at the helm. The clear potential liability in this situation is supported by documentation of CZ’s direct intent to evade US law and gain access to the market.
My Response to the CFTC Complaint | Binance Blog https://t.co/TadyotM7HN
— CZ 🔶 Binance (@cz_binance) March 27, 2023
The CFTC chairman expressed confidence in the case and stressed the importance of clear rules and authority in the crypto space. This case highlights the need for regulatory transparency and oversight to prevent fraud and manipulation that could harm US customers. Benham has previously spoken about the CFTC’s lack of authority in the commodity crypto space, and this case further underscores the necessity of robust regulation.
