U.S. investigations into Binance Holdings Ltd. have expanded, with authorities now examining possible insider trading and market manipulation — the latest sign that scrutiny of the world’s largest cryptocurrency exchange is intensifying.
As part of the inquiry, U.S. officials have been looking into whether Binance or its staff profited by taking advantage of its customers, said people with knowledge of the matter who asked not to be identified because the probe is confidential. The review involves Commodity Futures Trading Commission investigators, who in recent weeks have been reaching out to potential witnesses, one of the people said.
Though it’s not based in any one country, Binance runs a massive trading operation where everyday clients buy and sell digital tokens worth tens of billions of dollars outside the oversight of government watchdogs. That gives the exchange a view into millions of transactions, and U.S. authorities are questioning whether the firm exploited that access, including by trading on customer orders before executing them.
In a statement, a Binance spokesperson said the firm has a “zero-tolerance” policy for insider trading and a “strict ethical code” to prevent any misconduct that could hurt its customers or the crypto industry. Binance’s security team has long-standing guidelines for investigating wrongdoing and holding workers accountable, with termination being the minimal repercussion, the spokesperson added.
A CFTC spokeswoman declined to comment.
Compliance has been a constant headache for Binance and its outspoken founder, Changpeng Zhao, who goes by CZ. A growing list of nations have demanded that the company and affiliates cease offering services within their borders, claiming they lack proper licenses. In the U.S., the Justice Department and Internal Revenue Service have launched criminal probes into whether Binance has been a conduit for money laundering and tax evasion, Bloomberg has reported.
Binance hasn’t been accused of wrongdoing and the investigations may not lead to any official action. The CFTC and the Justice Department have been examining the firm for months and it could be some time before the agencies decide whether to pursue enforcement actions.
Binance is far from alone in getting unwanted attention from U.S. authorities. Washington has watched the rapid growth of crypto with alarm, with agencies ranging from the Treasury Department to the Federal Reserve and the Securities and Exchange Commission increasingly worried that the market is a hotbed of illicit activity and that firms are veering into traditional financial services without protecting consumers.
The CFTC was already probing whether Binance let U.S. residents buy and sell derivatives linked to Bitcoin and other virtual tokens, and the regulator is continuing to seek information as part of that line of inquiry.
The CFTC, which routinely shares its findings with other federal agencies, has sought internal Binance data and communications that could indicate the firm may have tried to sign up U.S. customers, one of the people said. Binance isn’t registered with U.S. authorities, meaning it’s supposed to bar Americans from trading derivatives, which the CFTC regulates.
Zhao, who regularly touts crypto on Twitter and in media interviews, said in a July blog post that there has been a “hyper-focus on regulation when it comes to Binance.” He highlighted Binance’s policies to prevent insider trading and, as another protection against misconduct, said the firm walls off the unit that handles the issuance of new tokens from the rest of the exchange’s staff. Binance’s global compliance team and its advisory board have grown 500% since last year, he added, with plans to double their size by the end of 2021.
Zhao, who has been working out of Singapore, has previously said that Binance has sophisticated surveillance systems to keep U.S.-based traders off its exchange. He has repeatedly said that the firm is committed to following rules in the countries in which it operates.
Among topics the CFTC has recently asked potential witnesses about is the location of Binance’s data servers, one of the people said. While it couldn’t be determined why the CFTC was interested, it could be tied to jurisdictional issues and whether the agency can assert authority over Binance. U.S. courts have previously tossed out litigation against the firm on the grounds that it has neither offices nor managers in the states.
In 2019, Zhou helped incorporate Binance.US, a separate company that caters to American clients. Brian Brooks abruptly resigned as Binance.US’s chief executive officer in early August after leading the company for just three months. Brooks, who was acting comptroller of the currency during the Trump administration, cited differences over the firm’s strategic direction.
The CFTC investigation into Binance is being run out of Chicago and includes some of the same officials who worked on the regulator’s case against BitMEX, a rival crypto exchange.
Last month, BitMEX agreed to pay $100 million in a settlement with the CFTC and the Financial Crimes Enforcement Network to resolve claims that it let U.S. residents trade derivatives and that it lacked proper anti-money-laundering controls. BitMEX didn’t admit or deny the allegations.
Solana – a Bitcoin Rival – Will Hit New All-time Highs This Year
Bitcoin rival Solana will hit new all-time highs of $250 by the end of 2021, predicts the boss of one of the world’s largest independent financial advisory, asset management and fintech organisations.
The bullish forecast from Nigel Green, founder and CEO of deVere Group, which has $12bn under advisement, comes as the price of Solana (SOL) has jumped 25% in two days amid a buoyant week for other cryptocurrencies, including Bitcoin which hit a fresh record high on Wednesday of more than $66,000.
Currently, at the time of writing, Solana is $208. Its previous price high was $214 reached in September this year.
Mr Green says: “Solana is certainly a rising star of crypto. With its price skyrocketing more than 100 times since the beginning of the year, its potential is becoming impossible to ignore.
“I believe that its bull market run will continue for the rest of this quarter and that it will hit new all-time highs of $250 by the end of 2021.”
The deVere boss and high-profile crypto advocate predicted in July that Bitcoin would surpass its previous all-time high this year – which was proven right this week. Similarly, he recently nailed his forecast that Cardano would hit $3.
He comments: “Solana has smashed past some key resistance levels in recent weeks, indicating that investors aren’t worried about squeezes to the downside.
“It’s gaining momentum and, as a result, a growing number of active holders. There’s no reason to expect this to slow considerably before the end of the year.”
Solana is a decentralised blockchain that gives developers a cutting-edge platform to create infinitely scalable DeFi apps and enable staking.
“The DeFi sector is about to explode due to the inherent real-world value it can offer almost every sector.
“Investors are increasingly understanding the network’s value not only as a platform for developers but as a worldwide financial utility.”
Mr Green concludes: “Solana is set to quietly outperform the rest of the crypto market this year. It’s one to watch.”
Ripple CEO Says The SEC Helped Ethereum to Overtake XRP As No.2 Crypto
Ripple chief executive Brad Garlinghouse has been airing his thoughts over the state of the crypto market and regulations, and a grudge over the financial regulator’s approach to Ethereum appears to have surfaced.
Speaking at the DC Fintech Week virtual conference on Oct. 21, the Ripple boss declared that Ethereum had been granted a regulatory green light that enabled it to surpass his company’s XRP token.
The U.S. Securities and Exchange Commission has been pursuing Ripple over claims that XRP is an unregistered security. In January, Ripple filed a Freedom of Information Act request with the SEC demanding to know why it didn’t consider ETH a security. Six months later in July, a district judge allowed the company to depose a former SEC official who declared in 2018 that ETH was not a security.
Garlinghouse clearly feels that his firm has been hard done by and Ethereum’s subsequent success is at least in part down to more favorable treatment by the SEC. He stated that it is affecting the market, adding: “Within the last few years, XRP was the second most valuable digital asset. As it became clear the SEC had given a hall pass to ETH, ETH obviously has kind of exploded and that clarity has helped.”
XRP was the second largest crypto asset by market capitalization in late December 2017. It has currently slipped to seventh place while Ethereum has held the second spot ever since.
Garlinghouse also stated that the SEC has been taking an aggressive posture against crypto with recent actions against his own company and Coinbase. Commenting on Ripple’s battle with the financial regulator, he said that the SEC claims to be protecting consumers but:
“You have nearly 50,000 U.S. people who hold XRP who are trying to sue the SEC for ‘protecting them’.”
Earlier this month a U.S. district judge ruled that individuals holding the company’s XRP token could not participate as defendants in the lawsuit.
The SEC’s request to extend the deadline to complete discovery in its ongoing lawsuit with Ripple Labs and its executives has been granted and pushed to Jan. 14, 2022.
Ripple claims that any further delay in resolving this case will “cause serious harm to the interests of the defendants and XRP holders.”
The court acknowledged this but stated that the “additional time sought by the SEC will not affect the schedule to resolve the case.”
Bitcoin´s New All-time High Underscores its Mainstream Value
Bitcoin is undeniably a mainstream asset class and most investors should consider including crypto assets as part of a diversified portfolio, asserts the boss of one of the world’s largest independent financial advisory, asset management and fintech organisations.
The bullish observation from Nigel Green, CEO and founder of deVere Group, which has $12bn under advisement, comes as the world’s dominant cryptocurrency hits a new all-time high of more than $66,000 on Wednesday.
Mr Green notes: “In July, we publicly predicted that Bitcoin would reach and most likely beat it’s previous all-time highs.
“I am confident that whilst there might be some profit-taking in the near-term, so that investors can accumulate more later, the momentum is such that we can expect prices to continue on their upward trajectory.”
He continues: “This fresh all-time high deniably cements Bitcoin as a mainstream asset class. I believe that most investors should consider including crypto assets as part of a diversified portfolio.
“Why? Because crypto is the inevitable future of money and there is clearly going to be advantages for those investors who have exposure early on – in the same way as those who invested in the major internet, online and tech successes back in the day, such as Amazon, Google and Apple, have secured enormous returns.”
Wednesday´s price highs come as the ProShares Bitcoin Strategy ETF – the first of its kind – launched on the New York Stock Exchange on Tuesday at the opening bell.
The deVere CEO says there are there are five main factors that will secure the longer-term upward price trajectory.
“First is the U.S. Federal Reserve saying it has no intention of banning cryptocurrencies. It’s highly probable that other cryptocurrencies will have more stringent regulatory oversight, yet Bitcoin could be viewed differently by authorities partly due to its gold-like status,” he observes.
“Second is the ongoing, mounting interest from institutional investors including Wall Street giants and major payments companies, who bring their capital, expertise and reputational influence to the market.
“Third, is the rising number of crypto advocates and mega influencers like Elon Musk, Jack Dorsey and Cathie Wood who have a clear message: crypto is the inevitable future of money.”
Fourth, the technicals back the prediction. Looking at Bitcoin halving events, over time we’ve seen that values rise substantially in the year after a halving. After the 2012 and 2016 Bitcoin halvings, prices increased by 55 times and 15 times respectively.
“And fifth, cryptocurrencies – Bitcoin in particular – have changed the way the world handles money, does business, makes transactions and manages assets. Investors appreciate the intrinsic value of digital, borderless, global currencies for trade and commerce purposes in increasingly digitalised economies in which businesses operate in more than one jurisdiction.”
He goes on to say: “This will only increase as mass global adoption increases. Only last month El Salvador became the first country in the world to adopt Bitcoin as legal tender, and I’m certain many others will follow suit.”
Mr Green concludes: “Today is a major milestone. It underscores crypto´s mainstream appeal and galvanises its place in the global financial system.”
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