Who is Changpeng Zhao? New Binance CEO is accused of violating US financial laws

The U.S. Commodity Futures Trading Commission (CFTC) has announced they intend to sue Binance and its CEO for "illegally" operating in the U.S.
Christopher McFadden
Binance's Co-founder and CEO Changpeng Zhao
Binance's Co-founder and CEO Changpeng Zhao


US regulators are taking legal action against Binance (one of the world's largest crypto exchanges) because they say it has been operating illegally. The Commodity Futures Trading Commission (CFTC) has accused Binance of trying to do business in the US while not registering with authorities, breaking several US financial laws, and avoiding oversight on purpose. The CFTC is seeking fines, trading and registration bans, and restitution.

The company's founder and CEO, Changpeng Zhao, was also named in the complaint. Zhao is a Chinese-born Canadian billionaire who previously worked at Bloomberg and launched Binance in 2017 after entering the crypto space. According to Forbes, he is among the 600 wealthiest people in the world, with a net worth of over $4 billion.

Binance has defended its actions by saying it has spent a lot of money to ensure that US users don't use its platform. One thing that is done is to block users who are American citizens or US residents with a US mobile number.

The CFTC's lawsuit against Binance comes as regulators pay more attention to the crypto industry, whose prices have fallen sharply. Last year, US officials warned the sector that they would use the laws they already had to crack down on problems like conflicts of interest and a lack of transparency. The CFTC has pursued more than 20% of cases related to the sector in the past year, including claims against Bitfinex and Tether. The agency has also brought fraud charges against Sam Bankman-Fried and FTX, a significant rival to Binance.

Binance allegedly evaded rules to maximize corporate profits, according to the CFTC. For much of its time in the US, Binance did not require customers to provide identity-verification information before trading on the platform. The CFTC also said Binance told US customers how to get around the company's stricter rules using virtual private networks (VPNs) and shell companies. The CFTC noted that the company used a global corporate structure that was, on purpose, hard to understand to avoid being watched.

Binance has stated that it intends to continue collaborating with regulators in the US and worldwide. The company has blocked users identified as American citizens, residents, or those with a US mobile number from using its platform. The CFTC filed its complaint in federal court in Illinois. It said it did so to protect American investors and to send a broader warning to people who work in the crypto sector.

Apparently, in response to the lawsuit's announcement, Mr. Zhao posted on Twitter a message that read "4" - referring followers back to advice in an earlier post urging people to "ignore .... fake news, attacks, etc."

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