“It’s not a bull market without FUD,” says CEO as Binance Gets Probed by CFTC
Jake Chervinsky is urging caution, to take this “seriously,” saying the “CFTC & SEC have fully shut down crypto companies for regulatory violations before.”
Leading spot cryptocurrency exchange Binance is being investigated by the Commodity Futures Trading Commission (CFTC) over concerns that it allowed Americas to trade on the platform that violated US rules.
The CFTC is investigating if the exchange permitted US residents to trade derivatives, reported Bloomberg on Friday. While the exchange says it doesn't have a corporate headquarters, the report notes that it has a Singapore office.
Binance isn't registered with the agency. However, unlike BitMEX, Binance hasn’t been accused of misconduct, and the investigation may not lead to enforcement action, the report added.
Interestingly, the news came on when the market saw a deep sell-off that took Bitcoin to $3,800 a year back. As of writing, BTC is trading around $57,400 while BNB, the native token of Binance exchanges at $272, down about 20% from its $340 peak hit on Feb. 19.
It’s not a bull market without some FUD.
Ignore FUD, keep BUIDLing.
— CZ 🔶 Binance (@cz_binance) March 12, 2021
Amidst this, Binance Chief Executive Officer Changpeng Zhao made several tweets referencing the regulatory action as “FUD.”
However, Jake Chervinksy, General Counsel at Compound Finance, urges the crypto community to take things “seriously.” He said,
“Even without individual criminal charges, civil enforcement actions can have serious consequences. CFTC & SEC have fully shut down crypto companies for regulatory violations before.”
I'm not sure how the entire crypto world got the idea that every government enforcement action ends with "a small fine" & "a slap on the wrist" but that's absolutely wrong.
Just ask Ross Ulbricht, or Alexander Vinnik, or John McAfee, or the BitMEX executives…the list goes on.
— Jake Chervinsky (@jchervinsky) March 12, 2021
Just this week, Binance named a former U.S. politician Max Baucus as a policy and government-relations adviser. The 79-year-old Democrat has served as Senator from Montana for over three decades, including the Senate Finance Committee for seven years.
Baucus will provide guidance and policy advice and further liaise with U.S. officials on best practices and policies affecting the industry, said Binance in a statement. And today, Binance is facing scrutiny from the regulators. However, what's important is that it has a San Francisco-based exchange Binance.US that was established in 2019.
In the past 24 hours, its US entity recorded $655 million in volume, nowhere near the $32.7 billion managed by Binance. In the Bitcoin futures market, Binance leads with $31.44 billion volume and $3.67 billion in bitcoin open interest, as per Skew.
The exchange also follows withdrawal limits, analyzes deposits for signs of illicit transactions, and implements know-your-customer (KYC) restrictions on its users.
“Binance is committed to working closely with governments around the world,” maintains “CZ.”