Changpeng Zhao, the CEO and owner of Binance (hereinafter referred to as CZ) is in a very sensitive situation. This cryptocurrency platform, the largest in the world, At the CFTC’s sight (Commodity Futures Trading Commission), United States Commodity Futures Trading Commission. This independent institution is responsible for regulating the US financial market and has taken legal action against Binance and its president.

What is at stake is neither more nor less, this Chinese company’s business license in the United States. Binance’s financial stability has been questioned for months despite the growing skepticism of analysts and financial experts at the end of last November following the collapse of FTX. CZ has since worked to convey an image of transparency and stability that could definitively be cut if the CFTC’s case succeeds. The future is more uncertain than ever.

Binance is in the eye of the hurricane

The charge brought by the CFTC to a court in Illinois (United States) is very clear. According to this regulator, Binance violated US regulations that govern how to work with digital assets or cryptocurrencies. And it did so in order to hide the physical location of its headquarters, again according to the CFTC. escape the control of regulatory agencies. The ultimate problem is that this Chinese company operates by turning its back on the limits imposed by current regulations for US citizens.

The case is not solely against CZ in its personal capacity and Binance as a legal entity; Samuel Lim, who was responsible for compliance with the regulations until 2022 in the organizational chart of this company, also filed a criminal complaint. The outlook doesn’t look good for either of them. If the US regulator proves that these two executives are promoting the illegal operation of digital assets in the US in an attempt to increase Binance’s profitability (and there seems to be strong indications that this is possible), CZ will have to make up for it. to all customers affected by these practices.

It will also likely face billions of dollars in fines and will be expressly banned from trading digital assets in the US in the future. As Spanish lawyer Cris Carrascosa so accurately explains in the tweet “Binance has all the ballots on this subject, it’s just Dying as a company in the USA, but at the same time that their employees cannot continue to work in regulated organizations. In addition to the sanctions.

12/ Patxi’s little joke is that not only does Binance have all the ballots to die as a US company in this regard, but its employees cannot continue to work in regulated organizations. In addition to the sanctions.

— Cris Carrascosa (@CarrascosaCris_) March 27, 2023

At this time, the heads of Binance have not said anything. Neither CZ nor any other company executive. Zhao has two options before him, and neither is looking good. If you turn a deaf ear and most likely do not attend the hearing in the United States, you will lose. You will not be able to have the operation and you will have to pay billions of dollars. On the contrary, if you decide to take part in the lawsuit, you will need to provide many documents to reveal your company’s operation and Binance’s confidentiality, if any, will be exposed. Here begins a soap opera that will definitely make a big splash in the coming weeks.

Cover photo: André Francois McKenzie

More information: CFTC

On Xataka: Cryptocurrencies: what they are, how they work and what else is there besides Bitcoin?