The CFTC alleged the company failed to verify customers’ identities and implement basic anti-money laundering controls, and that it advised U.S. clients on evading its purported measures to prevent them from trading on its platform.
It also alleged that Zhao and Lim facilitated these violations.
“As alleged, Zhao is liable for Binance’s violations based on his control over Binance and his long-running failure to act in good faith concerning Binance’s misconduct,” the regulator said in a release.
“Zhao is alleged to have been responsible for all major strategic decisions at Binance, including devising the secret plot to instruct U.S.-based VIP customers to evade Binance’s compliance controls and instructing Binance employees to ensure all communications about their control subversion took place over applications that facilitated the automatic destruction of evidence,” it added.
The CFTC is seeking disgorgement, monetary penalties, permanent trading and registration bans, and a permanent injunction against further violations.
The allegations have not been proven. The company has yet to respond to the allegations.
“The defendants’ own emails and chats reflect that Binance’s compliance efforts have been a sham and Binance deliberately chose — over and over — to place profits over following the law,” said Gretchen Lowe, principal deputy director of the CFTC’s enforcement division and chief counsel, in a release.
Previously, Binance clashed with the Ontario Securities Commission (OSC) over its operations in Canada.
In 2022, the firm agreed to an undertaking with the OSC after the regulator alleged that it failed to follow through on a pledge to withdraw its services in Ontario.
Since then, following the failure of several major crypto firms, the Canadian Securities Administrators (CSA) stepped up their demands from unregistered crypto trading platforms seeking to operate in Canada in an effort to better protect investors.
The CSA’s latest requirements, which took effect March 24, impose tougher governance and custody standards on crypto platforms that are seeking registration in Canada.
