The recent Commodity Futures Trading Commission (CFTC) lawsuit against Binance has sent shockwaves throughout the cryptocurrency community. The CFTC has accused the exchange of operating illegally in the US and allowing illicit transactions to take place on its platform. The 74-page lawsuit has raised concerns about whether other federal agencies will file their own complaints against the crypto behemoth.
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Experts have suggested that the lawsuit could prompt the Justice Department to file criminal charges against Binance. The complaint includes internal messages from Binance that mention the U.S.-designated terrorist organization Hamas, among other possible illicit activities on the platform. Jacob Frenkel, an attorney at the law firm Dickinson Wright, has stated that "Once you start talking about cryptocurrency being a vehicle for transactions by terrorist or criminal networks, particularly those that may be subject to U.S. sanctions, that becomes an open invitation for criminal charges."
Internal messages in the CFTC complaint show that Binance executives discussed transactions by Hamas on the exchange in 2019. Binance officers even acknowledged some of their customers are "here for crime" on the platform. If not the Department of Justice, others see the Securities and Exchange Commission (SEC) potentially stepping in soon and launching its own enforcement action.
The SEC has been active in the crypto exchange space and may pursue a separate action against Binance. Parallel CFTC and SEC actions raise difficult questions about whether digital assets are commodities or securities. However, regulators can find ways to navigate this issue, as they did with the FTX.
The permanent injunction, if granted in court or agreed upon in a settlement, would ban Binance and its CEO from continuing to facilitate bitcoin, ether, litecoin, BUSD, and USDT trades in the U.S. Experts argue that Binance's alleged active evasion and flouting of U.S. law has painted an especially bright target on them. According to Rohan Grey, an assistant law professor at Willamette University, "If there is anybody to make an example of after Sam Bankman-Fried, I would say it's CZ. The contempt by which he sort of showed the U.S. regulatory system, by operating everywhere it wasn't, while still kind of dominating the U.S. crypto ecosystem."
The CFTC's complaint against Binance included more detail than a typical enforcement action from the regulator, throwing observers a bit of a curveball. The lawsuit has raised concerns about whether other federal agencies will file their own complaints against the crypto behemoth. Aaron Kaplan, co-CEO of Prometheum, a digital asset security market infrastructure company, has stated that "all major financial regulators are jockeying for position to regulate crypto."
The CFTC lawsuit against Binance has sent shockwaves throughout the crypto community, and experts are wondering if other federal agencies will file their own complaints against the exchange. The lawsuit could prompt the Justice Department to file criminal charges against Binance, and the SEC may also launch its own enforcement action. The permanent injunction would ban Binance and its CEO from facilitating bitcoin, ether, litecoin, BUSD, and USDT trades in the U.S. The CFTC's complaint against Binance included more detail than a typical enforcement action from the regulator, indicating that all major financial regulators are vying to regulate crypto.
