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- Binance is under investigation by the CFTC for insider trading and market manipulation.
- Reports of investigations in the US emerged in the first quarter of the year but were dismissed by the CEO as FUD.
Binance is facing its greatest regulatory hurdle yet. After numerous investigations and concerns from regulators all around the world, the US is joining the growing list. According to a report by Bloomberg, the US Commodity Futures Trading Commission (CFTC) has launched an investigation against Binance Holdings for insider trading and market manipulation. Of note, the CFTC is investigating the global platform and not the US subsidiary Binance.US.
The exchange has either been cautioned for unlicensed operations or non-compliance in numerous countries including Singapore, the UK, Hong Kong, Japan, Malaysia, South Africa and Thailand. Under pressure, the exchange has in recent months implemented new initiates to promote compliance and responsible trading. As CNF reported, the exchange reduced the withdrawal limit and launched a tax report system. The exchange has also had to limit or halt its services and introduced stricter verification requirements. This has helped it limit its exposure.
The US regulator is set to be the biggest test yet. Furthermore, the allegations are consequential in that they are insider trading and market manipulation. For starters, the regulator is looking into some top executives who are said to have profited based on insider information in lieu of the customers.
Binance denies claim
The exchange has already come out to deny the claim. According to a spokesperson, Binance has zero tolerance for insider trading. The exchange has claimed that if anyone was found, he would not only face termination but also the law.
Binance responded to the media that Binance has implemented a zero-tolerance policy for insider trading, and the Binance security team has established procedures for investigating and prosecuting people involved in similar behaviors. https://t.co/rXZ2itB7iC
— Wu Blockchain (@WuBlockchain) September 18, 2021
Outspoken Binance CEO Changpeng Zhao is yet to make any statements in regard to the investigations. However, he has in the past revealed that he and the exchange are ready to work with regulators around the world. He even went as far as to suggest that he was willing to step down for a more compliant leader who would work with regulators to lead the exchange.
In the heat of the regulatory battle, Brian Brooks who had served as the Binance U.S CEO for just 3 months, resigned citing “differences over strategic direction.” His resignation was widely viewed as a sign of a regulatory storm ahead. A former Comptroller of the Currency, he gave Binance much-needed legitimacy in the face of regulators. As such, his impromptu resignation was a red flag. The new investigation could be part of the reason that led Brooks to step down. Still a developing story, much is still unknown. In the days to come, regulators will reveal their findings and give the accused a chance to defend themselves.
Related: More trouble for Binance as Brian Brooks resigns as Binance U.S CEO
Notably, despite all the regulatory woes, Binance continues to lead in terms of trading volume. As CNF reported, a report, titled “Exchange Review August 2021”, showed that Binance dominated spot monthly volume by topping $751 billion, outperforming OKEx, Huobi, Coinbase and others. This report illustrates Binance’s influence and wide reach.
Read More: Binance records 65% increase in trading volume despite regulatory scrutiny
