Binance sued by US regulators for breaking trading laws

28 Mar 2023

Image: © photo_gonzo/

Binance Holdings (IE) Limited, the Irish subsidiary of the crypto exchange, is one of the entities sued by the CFTC.

US regulators have sued Binance, the world’s largest crypto exchange, for numerous alleged violations of US trading rules.

In a statement yesterday (27 March), the Commodity Futures Trading Commission (CFTC) said it has filed a civil enforcement action against Binance, including its Irish subsidiary, as well as CEO Changpeng Zhao and former chief compliance officer Samuel Lim.

According to the CFTC, the defendants allegedly violated provisions of the US Commodity Exchange Act while engaging in “a calculated strategy of regulatory arbitrage to their commercial benefit”.

“[Binance] operates the Binance centralised digital asset trading platform along with numerous other corporate vehicles through an intentionally opaque common enterprise, with Zhao at the helm as Binance’s owner and chief executive officer,” the CFTC wrote in the statement.

The regulator claims in its filing Binance has offered and executed commodity derivatives transactions to and for US persons from July 2019 through the present.

It also alleges Binance’s compliance programme has been ineffective and that, at Zhao’s direction, the crypto exchange has instructed its employees and customers to “circumvent compliance controls” in order to maximise corporate profits.

During the concerned period, Binance allegedly did not require its customers to provide any identity-verifying information before trading on the platform, despite a legal duty to do so.

CoinMarketCap data shows that Binance is the largest crypto exchange in the world by trading volume, with more than $11bn traded in the last 24 hours and 90m customers globally. It was launched in 2017 and became the biggest crypto exchange within months.

Last year, the digital assets service provider bagged its first major European win after France gave Binance regulatory approval – and a European headquarters in Paris soon followed. At the time, Dublin was one of the cities in the running for the HQ.

Instead, Binance has several subsidiaries in Ireland and Binance Holdings (IE) Limited is one of the entities that has been sued in the latest complaint.

“I have been clear that the CFTC will continue to use all of its authority to find and stop misconduct in the volatile and risky digital asset market,” said CFTC chair Rostin Behnam.

“For years, Binance knew they were violating CFTC rules, working actively to both keep the money flowing and avoid compliance. This should be a warning to anyone in the digital asset world that the CFTC will not tolerate wilful avoidance of US law.”

Binance responded to the complaint calling it “an incomplete recitation of facts” after an initial review of the filing.

“We do not agree with the characterisation of many of the issues alleged in the complaint,” Zhao wrote in a blogpost on the Binance website. “We are aware of no other company using systems more comprehensive or more effective than Binance.”

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Vish Gain is a journalist with Silicon Republic