Previously nominated to Binance Holdings Ltd. suspicions on the part of the US financial departments were broadened. Now they are examining the company for insider trading and market manipulation.
Although the largest cryptocurrency exchange does not have a physical headquarters, it is one of the largest trading platforms in the cryptocurrency industry, allowing customers to buy and sell tens of billions of dollars in digital currencies. And all this without due supervision from the world financial regulators, which does not suit, including the official departments of the United States.
According to Bloomberg, US regulators are investigating whether the exchange or its employees benefited from the use of their clients or inside information. The Commodity Futures Trading Commission joined the analysis of the company's activities. Over the past few weeks, they have contacted potential witnesses to learn more about the situation. One of the sources interviewed by the CFTC as part of the investigation stated that the questions concerning, among other things, the location of Binance data centers.
Binance representatives, in turn, claim that they adhere to a policy of “zero tolerance” for insider trading and refer to a “strict code of ethics” that prevents any illegal actions designed to harm the clients of the exchange or even the entire industry.
Compliance with all regulatory requirements and increased attention from international agencies has always been a headache for Binance and its head Changpeng Zhao. Especially recently, when all global regulators have been keenly interested in the issue of the exchange's lack of a license to trade cryptocurrencies. The US Department of Justice and the Internal Revenue Service have launched a criminal investigation to determine if the marketplace was a channel for money laundering and tax evasion.
Of course, no formal accusations have yet been filed by US agencies. Therefore, the investigation may not reveal any wrongdoing by the management of the exchange and may not lead to restrictions. However, over the past months, the CFTC, together with the US Department of Justice, have been actively studying the issue and it may take a long time before the announcement of a decision on coercive measures against Binance, or the absence of claims against the exchange.
Changpeng Zhao has previously highlighted Binance's focus on preventing insider trading by blocking communication between the token listing division and the rest of its staff. In addition, the advisory board and compliance team have grown by more than 500% over the past year. By the end of 2021, the exchange plans to double its staff.
Recall that yesterday it became known about a new member of the Binance team Niels Andersen-Roede, an ex-Europol employee and a former employee of the darknet department of the Netherlands National Police. According to management, this step will strengthen the investigation and audit team to identify attackers operating within the platform.
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