Binance CEO Changpeng “CZ” Zhao rejected the CFTC’s allegations, arguing that the cryptocurrency exchange “under no circumstances operates for profit or ‘manipulates’ the market.”
In a March 28 blog post, the CEO responded to the CFTC’s lawsuit accusing Binance and CZ of engaging in improper compliance procedures and transactions, calling the allegations an “incomplete statement of facts.” In its complaint, the CFTC alleges that Binance uses 300 “internal accounts” to trade on its own platform and fails to properly disclose to customers in its terms of use that it trades on its own market.
The CFTC also accused Binance of keeping information secret and claimed that the exchange refused to respond to an investigative subpoena issued by the Commission seeking information about its trading activities.
“Based on information and belief, Binance has not placed the trading activity of Merit Peak, Sigma Chain, or approximately 300 of their internal accounts under any anti-fraud or anti-manipulation surveillance or control,” the statement added.
However, CZ argues that while Binance “transacts” in a variety of contexts, it is primarily for the purpose of converting its crypto income into spending in fiat or other cryptocurrencies. “Personally, I have two accounts at Binance: one for the Binance Card and one for my crypto assets. I eat our own dog food and store my crypto on Binance.com. I also need to switch cryptocurrencies from time to time to pay for my personal expenses or cards," he added.
CZ also refuted claims that its employees engaged in “insider trading,” saying Binance has a 90-day no-day trading policy for employees, adding: “This is to prevent any employees from actively trading. We also prohibit our employees from futures trading.”
He further stated that employees are not allowed to buy or sell tokens if they have “private information” about them. “I strictly adhere to these policies myself. I have never been involved with Binance Launchpad, Earn, Margin or Futures either. I know the best use of my time is to build a solid platform to serve our users,” he added road.
Zhao called the recent CFTC filing both "unexpected and disappointing" because it has been working with regulators for more than two years. The CFTC also charged senior members of the company with “actively facilitating violations of U.S. law,” including “assisting and advising” U.S. clients on how to evade Binance’s own compliance controls, adding that Binance’s compliance program was “for show.” However, CZ denies lax compliance.
He said that Binance.com has developed “best-in-class” technology to ensure compliance and now has more than 750 employees dedicated to ensuring the business operates within anti-money laundering (AML) and know-your-customer (KYC) laws: “To date, we have processed over 55,000 LE requests and assisted US LE in freezing/seizure over $125 million in funds in 2022 alone and $160 million in 2023 to date.” CZ also noted that Binance.com has 16 licenses to provide digital asset trading services, the most of any cryptocurrency trading platform.
