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Binance Faces CFTC Probe Over US Customers Trading Derivatives: Report
The agency hasn't accused Binance of any wrongdoing, according to the Bloomberg report.
Binance is being investigated by the Commodity Futures Trading Commission to determine if U.S. residents traded derivatives on the cryptocurrency exchange in violation of U.S. rules, Bloomberg reported.
STORY CONTINUES BELOW
Binance hasn't been accused of any wrongdoing and the CFTC may not bring an enforcement action, according to the report, which cited people familiar with the matter. Bloomberg also did not outline a time period for this alleged trading.
Spokespeople for Binance and the CFTC did not immediately return requests for comment. However, in a tweet posted after Bloomberg's report ran, the exchange's founder and CEO, Changpeng Zhao, appeared to call the report "FUD," using an acronym for "fear, uncertainty and doubt" that is often used to refer to unwelcome news in the crypto industry.
It’s not a bull market without some FUD.
— CZ 🔶 Binance (@cz_binance) March 12, 2021
Ignore FUD, keep BUIDLing.
The news comes a day after Binance announced it has hired Max Baucus, a former U.S. senator and ambassador to China, as a policy adviser who would be able to navigate the exchange's relationship with U.S. regulators. Baucus currently operates a consulting business.
Binance does not directly serve U.S. customers on paper, instead using a San Francisco-based entity operating as Binance.US for that purpose. Despite this, the parent exchange has announced at least twice in two years that it would be removing all U.S. customers from its platform.
The probe is another sign regulators are trying to funnel U.S. investors into regulated channels.
Derivatives trading in the U.S. is strictly overseen by the CFTC. The agency brought an enforcement action last year against BitMEX, also on allegations it allowed U.S. customers to trade derivatives products. That case, which is also being pursued by the Department of Justice, is ongoing.
UPDATE (March 12, 2021, 14:00 UTC): Updated with additional context throughout.
Kevin Reynolds
Kevin Reynolds was the editor-in-chief at CoinDesk. Prior to joining the company in mid-2020, Reynolds spent 23 years at Bloomberg, where he won two CEO awards for moving the needle for the entire company and established himself as one of the world's leading experts in real-time financial news. In addition to having done almost every job in the newsroom, Reynolds built, scaled and ran products for every asset class, including First Word, a 250-person global news/analysis service for professional clients, as well as Bloomberg's Speed Desk and the training program that all Bloomberg News hires worldwide are required to take. He also turned around several other operations, including the company's flash headlines desk and was instrumental in the turnaround of Bloomberg's BGOV unit. He shares a patent for a content management system he helped design, is a Certified Scrum Master, and a veteran of the U.S. Marine Corps. He owns bitcoin, ether, polygon and solana.
