BEIJING, March 28 (TMTPOST) – The CFTC accused Binance on Monday of lacking proper Know Your Client and other anti-money laundering compliance procedures, operating without registration, and using an app that automatically deletes chat logs to communicate with U.S. customers to avoid leaving evidence.

A few hours later, Zhao responded on the official website of Binance, stating his disagreement with the allegations of the complaint on many issues. The founder of Binance, Zhao is a self-made entrepreneur who rose to prominence in Singapore’s wealthy circles. Born in eastern China’s Jiangsu province, he immigrated to Canada with his family in the 1980s, founded Binance in 2017 and quickly grew it into the world’s largest cryptocurrency exchange. Despite being a Canadian national, he has been living in Singapore for several years. However, with the recent plunge of Bitcoin, he has lost the status as the richest Chinese.

The CFTC’s complaint alleges that Zhao owned and controlled numerous entities operating on the Binance platform as a “common enterprise.” The agency cited examples, such as the CEO personally approving minor office expenses and using his personal credit card to pay for services like Amazon Web Services, as evidence. However, the most damaging allegations for Binance are buried within the filing, including the potential facilitation of transactions by organized crime and terrorist organizations. The CFTC also cites internal chat logs involving the then-Chief Compliance Officer Samuel Lim and an anti-money laundering reporting officer. As part of the lawsuit, the agency seeks injunctions that would effectively bar Binance and its affiliates, as well as Zhao and Lim, from the U.S. commodities industry, as well as disgorgement of salaries, profits, and other earnings made.

CFTC Chairman Rostin Behnam stated that the enforcement action sent a clear message that the CFTC would protect U.S. investors from violations, regardless of where the illegal activities occur. Behnam emphasized the CFTC’s commitment to identifying and stopping misconduct in the volatile and risky cryptoasset market. “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 willful avoidance of U.S. law,” he said.

In response to the CFTC’s civil lawsuit, Zhao expressed disappointment, citing over two years of cooperation with the agency. He said, “upon an initial review, the complaint appears to contain an incomplete recitation of facts, and we do not agree with the characterization of many of the issues alleged in the complaint. While we will only be able to give full responses in due time, we will address a few key points below.” He pointed out that Binance has adopted one of the highest standards of KYC and anti-money laundering to disable U.S. users. The company also boasts a compliance team of over 750 people and holds the largest number of registered licenses and permits globally, currently at 16. Additionally, the company does not trade for profit or manipulate the market under any circumstances.

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