Binance CEO: CFTC opened an investigation is just FUD but the crypto market still reacted with a sudden price drop
The world’s largest crypto exchange Binance is being investigated by the U.S. Asset Futures Trading Commission (CFTC) for allowing US users to participate in trading derivative products.
Binance was investigated by the CFTC on allegations of letting US users trade derivatives
According to sources from Bloomberg, the CFTC is investigating whether Binance, an unregistered trading platform with the agency, will allow US users to buy and sell derivative products on the exchange, for example. futures, options, … for cryptocurrencies. However, for now, the investigation has not concluded, meaning that the CFTC has not officially charged Binance.
When you know it is FUD. pic.twitter.com/Phgs53mp9l
— CZ ? Binance (@cz_binance) March 12, 2021
The latest move above shows that US officials are strengthening measures to regulate the cryptocurrency sector, which is becoming hotter than ever with the continuous increase in the price of currencies. Although there are no specific regulations, the CFTC is treating Bitcoin (BTC), Ethereum (ETH), and similar currencies as commodity assets, so it is under the authority of this authority. As a result, platforms that allow US users to trade such assets are required to register with the commission.
Binance said in an interview with Bloomberg that it has yet to receive any contact information from the CFTC. However, the exchange confirmed that until now they have always tried to comply with the laws of the United States, as shown by the Binance.com platform that blocked users in the US and transferred them to Binance.US – the exchange that has Licensed by many state governments.
A representative from Binance said:
“We are willing to cooperate with regulators around the world and take compliance with the law very seriously.”
Will Binance go into the “dumped car” of BitMEX?
Previously, in October 2020, the CFTC had a similar move with the BitMEX exchange, but it was much more stressful when the Commission accused the BitMEX leadership, including CEO Arthur Hayes, CTO Samuel. Reed violates anti-money laundering regulations and operates an unregistered derivatives exchange in the US. Mr. Reed was arrested by the US authorities, while Mr. Hayes almost disappeared from social media and spoke up recently to reach an agreement with the US side.
BitMEX then had to reorganize its operations, appoint a new leadership board and terminate its operations in the US.
Foreseeing the risk of getting into trouble with the US law, Binance in 2019 deployed a separate platform for users here, called Binance.US, and prevented US citizens from accessing Binance platform. Unlike Binance.com, which provides all of Binance’s existing services, Binance.US only supports spot trading and staking certain cryptocurrencies, not derivative transactions.
However, in an interview with Bloomberg last November, Changpeng Zhao admitted there are still loopholes for US users to bypass.
“We’ve blocked access from the US, but users have always found other ways to get around, so we have to adopt smarter ways of blocking.”
As soon as the news of Binance being investigated by the CFTC went viral, BNB’s price plunged 11% from $ 275 to $ 247, before rebounding to $ 263 at press time.
Changpeng Zhao also indirectly acknowledged the information via a Twitter post, stating:
It’s not a bull market without some FUD.
Ignore FUD, keep BUIDLing.
— CZ ? Binance (@cz_binance) March 12, 2021
The news comes just a day after Binance announced the appointment of former US Senator Max Baucus, who had spent time as US Ambassador to China, as legal advisor and government relations. . This move shows that the exchange is aware of the CFTC’s allegations and has taken steps to prepare.
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