Binance sued by CFTC: Excerpts from the Lawsuit

[rufuspollock]

Binance and CEO Zhao charged by CFTC over "willful evasion" of US laws. https://web3.lifeitself.org/notes/binance-sued-by-cftc-2023-03-28

Press release from CFTC:

https://www.cftc.gov/PressRoom/PressReleases/8680-23

Full lawsuit

https://storage.courtlistener.com/recap/gov.uscourts.ilnd.431767/gov.uscourts.ilnd.431767.1.0_1.pdf

Comments

• Good tweet thread with key issues: https://twitter.com/adamscochran/status/1640378686397448192

[rufuspollock]

Para 4

Binance’s own documents for the month of August 2020 the platform earned $63 million in fees from derivatives transactions and approximately 16% of its accounts were held by customers Binance identified as being located in the United States.

[rufuspollock]

Para 5: intentional obfuscation of HQ

Binance purposefully obscures the identities and locations of the entities operating
the trading platform. For example, Binance’s customer-facing “Terms of Use,” purports to be a
contract between the customer and something simply called the “Binance operators,” which is a
term that has no concrete meaning. ... While Binance has maintained offices in numerous
locations, including Singapore, Malta, Dubai, and Tokyo at various times during the Relevant
Period, Binance intentionally does not disclose the location of its executive offices. ... Zhao explained this strategy
during a June 2019 internal meeting, stating that Binance conducts its operations through various
entities incorporated in numerous jurisdictions to “keep countries clean [of violations of law]” by
“not landing .com anywhere. This is the main reason .com does not land anywhere.”

Reminds me so much of BCCI.

[rufuspollock]

Para 6 - Directing and assisting US residents to trade on platform (against publicly stated ban)

Binance and its officers, employees, and agents have instructed U.S. customers to use
virtual private networks (“VPNs”) to obscure their location; allowed customers that had not
submitted proof of their identity and location to continue to trade on the platform long after
announcing such conduct was prohibited; and directed VIP customers with ultimate beneficial
owners, key employees who control trading decisions, trading algorithms, and other assets all
located in the United States to open Binance accounts under the name of newly incorporated
shell companies to evade Binance’s compliance controls.