Cryptocurrency

Binance Responds to CFTC Unexpected Lawsuit as Depositors Withdraw Huge Amount

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One of the world’s largest crypto exchange platforms Binance has responded to the unexpected lawsuit slammed on the company by the Commodity Futures Trading Commission (CFTC) which has seen depositors withdraw huge sums of money from the platform.

The CFTC whose mission is to promote the integrity, resilience, and vibrancy of the U.S. derivatives markets through sound regulation, had alleged that Binance operates its trading platform along with numerous other corporate vehicles through an intentionally opaque common enterprise, with Zhao at the helm as Binance’s owner and chief executive officer.

It added that Binance has allegedly chosen to knowingly disregard applicable provisions of the CEA while engaging in a calculated strategy of regulatory arbitrage to their commercial benefit, coupled with other charges. 

In CFTC’s continuing litigation, the agency seeks disgorgement, civil monetary penalties, permanent trading and registration bans, and a permanent injunction against further violations of the CEA and CFTC regulations, as charged.

In a response to the charges levied against the crypto exchange company, the CEO of Binance described the allegations as “unexpected and disappointing”, and he further denied any illegal conduct on his company. Zhao who was enraged by the lawsuit disclosed that his company has always been corporative with the CFTC.

He wrote,

“Today, the CFTC filed an unexpected and disappointing civil complaint, despite our working cooperatively with the CFTC for over two years. Upon an initial review, the complaint appears to contain an incomplete recitation of facts, and we do not agree with the characterization of many of the issues alleged in the complaint.

“While we will only be able to give full responses in due time, we will address a few key points below. Binance has developed best-in-class technology to ensure compliance, and is the first global (non-US) exchange to implement a mandatory KYC program.”

Zhao further added that Binance holds the highest number of licenses/registrations globally, and does not trade for profit or manipulate the market under any circumstances.

As expected, the lawsuit has impacted the crypto market which saw around $30 billion leave the crypto space leading to a drop in the market capitalization to $1.17 trillion.

Also, Binance which has been in damage control mode lately has seen investors withdraw huge sums with around $9 million moved from the platform and $400 withdrawn from Ethereum as a cautionary move in case things degenerate into something unpleasant.

Investors King understands that if the lawsuit scales through, it could lead to the complete shutdown of Binance in the United States and the severing of Binance’s international payment rails in US partner nations. It could also put Binance in violation of offering any trading services outside the US.

Meanwhile, Fox Business journalist and contributor Eleanor Terrett disclosed that the lawsuit against Binance was served without any warning which she feels is politically motivated.

It is however interesting to note that this isn’t the first time that customers have pulled billions of dollars from Binance following US regulator probes or other troubles at the exchange. The crypto exchange suffered net outflows as high as $3 billion over 24 hours when US authorities charged FTX CEO Sam Bankman-Fried with fraud.

Ever since the FTX collapse which led to a string of high-profile bankruptcies in the industry, US regulators have stepped up their crackdown on crypto exchanges.

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