Leading cryptocurrency exchange, Binance, and its CEO Changpeng “CZ” Zhao, are in hot water as the United States Commodity Futures Trading Commission (CFTC) filed a lawsuit against the company for trading violations. The case was filed in the U.S. District Court for the Northern District of Illinois, Bloomberg reported.
The CFTC’s allegations center around Binance‘s failure to adhere to regulatory obligations by not registering properly with the derivatives regulator.
The cryptocurrency exchange has been under the CFTC’s microscope since 2021, and in February, Binance acknowledged the likelihood of facing regulatory action in the United States. The company has since been actively cooperating with regulators in an effort to resolve the situation.
However, the CFTC is not the only federal agency scrutinizing Binance’s operations.
The Internal Revenue Service (IRS) and federal prosecutors have been investigating the exchange’s compliance with Anti-Money Laundering (AML) rules. The Securities and Exchange Commission (SEC) is also examining whether Binance permitted U.S. traders to access unregistered securities.
While Binance has been working closely with regulators to address their concerns, the latest legal action may force the company to make drastic changes to its operations in the United States and beyond.
Changpeng Zhao, Binance’s CEO, has not yet issued a public statement in response to the lawsuit. However, as one of the most influential figures in the crypto industry, his response will likely be closely watched by both the crypto community and regulators.