Zhao Rails Against CFTC “Incomplete Recitation of Facts”

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  • Binance CEO Changpeng Zhao has refuted some of the claims made by the CFTC yesterday
  • Zhao rebutted suggestions that Binance has repeatedly and knowingly flouted the rules around KYC and AML
  • He also refuted suggestions that he has hundreds of accounts with which he trades on the platform

Binance CEO Changpeng Zhao has claimed that the charges brought yesterday by the Commodity Futures Trading Commission (CFTC) represent an “incomplete recitation of facts”, tackling some of the issues the agency presented. In a blog post published in the hours after the CFTC announced its charges, Zhao reiterated how Binance has tried to work with regulators and how, in many cases, its internal mechanisms go beyond those that regulators demand, adding that the accusations of employee trading are also wide of the mark.

Zhao Calls Charges “Unexpected and Disappointing”

Zhao began his response by saying that the charges against the company, himself and Binance’s former chief compliance officer were “unexpected and disappointing”, given that the company has allegedly been “working cooperatively with the CFTC for over two years.” This is in contrast to the opinion of many in the crypto space, who have been waiting for charges against the exchange by either the CFTC, Securities and Exchange Commission or some other U.S. authority for some time.

Zhao didn’t outright deny all the charges laid at his, Lim’s and Binance’s respective doors, instead pointing to the positive work Binance has done in the areas in which they have been accused of transgression. In the area of U.S. compliance, Zhao said that the company has developed advanced technology to ensure compliance with KYC and AML regulations, including the implementation of a mandatory KYC program and blocking of U.S. users through various means, such as by nationality, IP, mobile carrier, device fingerprints, bank deposits and withdrawals, blockchain deposits and withdrawals, and credit card bin numbers.

The CEO also referenced the company’s 750-strong compliance team, which he said has handled 55,000+ law enforcement requests and has assisted US agencies freezing/seizing more than $125 million in funds in 2022 alone and $160 million in 2023 so far, including helping to bring down Bitzlato earlier this year.

Binance Has Employee Trading Guards in Place

With regard to the accusations of employee trading, Zhao argued that Binance does not engage in market manipulation, although the company allows trading in certain situations, such as for covering expenses or providing liquidity for less liquid pairs. He added that the company has a 90 day no-day-trading rule for employees and prohibits them from trading in Futures, while employees with access to private information are also not allowed to buy or sell those coins.

Zhao added that Binance “will only be able to give full responses in due time”, which likely means in the format of a legal rebuttal to the CFTC. It remains to be seen however whether Binance plans to fight or settle the case, and this won’t be known for some time yet.