Technical Compliance and Blocking to US Users
Changpeng Zhao said that Binance.com has developed first-class technology to ensure compliance. Binance was the first global (non-US) exchange to implement a mandatory KYC (Know Your Consumer, Know Your Customer) program and still has one of the highest standards in KYC and AML (Anti-Money Laundering). “We block U.S. users by nationality (KYC), IP (including commonly used VPN endpoints outside the U.S.), mobile carriers, device fingerprints, bank deposits and withdrawals, blockchain deposits and withdrawals, credit card issuing bank identification numbers (bin numbers), and more. We know of no other company using a system that is more comprehensive and effective than Binance.”
Cooperation and transparency with law enforcement
Changpeng Zhao said that Binance is committed to maintaining transparency and cooperation with regulatory agencies and law enforcement agencies (LEs) in the United States and around the world. Binance currently has a compliance team of more than 750 people, many of whom have previous backgrounds in law enforcement and regulatory agencies. "To date, we have processed more than 55,000 LE requests and assisted U.S. LEs in freezing/seizuring over $125 million in funds in 2022 and $160 million in funds so far in 2023. We intend to continue to respect and cooperate with regulators in the United States and around the world."
In terms of registration permissions and licenses, Changpeng Zhao believes that “Binance.com has the largest number of registration permissions/licenses in the world (currently 16, and the number will increase), and is well received by our user community.”
Transaction status
Changpeng Zhao stated that Binance will not engage in profitable trading or "manipulate" the market under any circumstances. Binance conducts “trades” in a variety of situations. “Our revenue is in crypto. We do need to convert them from time to time into fiat or other cryptocurrencies to pay fees. We have affiliates that provide liquidity for less liquid pairs. These affiliates are specially monitored and are not allowed to make huge profits.”
Changpeng Zhao mentioned, “Personally, I have two accounts with Binance: one for the Binance Card and one for my crypto assets. I eat our own dog food (using my own company’s services) and store my cryptocurrencies on Binance.com. I also need to convert cryptocurrencies from time to time to pay for my personal expenses or credit cards.”
He said that Binance has a 90-day no-trading rule for employees, which means that Bitcoin cannot be sold within 90 days of the last purchase, and vice versa. This is to prevent any employee from actively trading. Binance also banned employees from futures trading. Additionally, Binance has strict policies regarding any employees who have access to private information, and they are not allowed to buy or sell these cryptocurrencies. "I strictly abide by these policies myself. I have never participated in the functions of Binance Launchpad (blockchain asset issuance platform), Earn (one-stop trading platform), Margin (margin trading) or Futures (futures)."
Binance and founder Changpeng Zhao were sued by the CFTC
At 11:24 local time on March 27, the U.S. Commodity Futures Trading Commission (CFTC) announced on its official website that it had filed a civil enforcement action with the U.S. District Court for the Northern District of Illinois, accusing Changpeng Zhao and three entities operating the Binance platform of repeatedly violating the Commodity Exchange Act (CEA) and CFTC regulations to circumvent compliance controls. The CFTC also charged Binance’s former Chief Compliance Officer (CCO) Samuel Lim with aiding and abetting Binance’s violations.
The CFTC stated that in its ongoing litigation against Binance and Changpeng Zhao, the agency is seeking to recover proceeds, civil penalties, the issuance of a permanent injunction to cease trading and registration, and a permanent injunction for further violations of CEA and CFTC regulations.
After multiple foreign media reported that Changpeng Zhao and Binance were accused by the CFTC, Bitcoin once fell below $26,700. According to CoinMarketCap data, as of press time, Bitcoin has rebounded slightly to around $27,000, but it has still fallen 3.37% in the past 24 hours.
Image from CoinMarketCap
