The United States Commodity Futures Trading Commission (CFTC) has filed a lawsuit against Binance and its CEO Changpeng Zhao for alleged trading violations. According to a Bloomberg report, the lawsuit was filed in the US District Court for the Northern District of Illinois.
Binance, one of the world’s largest cryptocurrency exchanges, has been under investigation by the CFTC since 2021. The CFTC claims that Binance failed to meet regulatory obligations by not properly registering with the derivatives regulator. The exchange acknowledged in February that it was likely to face regulatory action in the US and had already started working with regulators.
Investigations by Other Federal Agencies
Apart from the CFTC, Binance has been under investigation by other federal agencies, including the Internal Revenue Service and federal prosecutors. The investigations revolve around Binance’s compliance with Anti-Money Laundering rules. The Securities and Exchange Commission is also looking into whether Binance allowed US traders to access unregistered securities.
Also Read: Kraken Under SEC Investigation for Securities Law Violations
Effect on Cryptocurrencies
The news of the lawsuit had an immediate impact on the cryptocurrency market. Bitcoin and Ethereum, the two largest cryptocurrencies by market capitalization, fell on the news. Bitcoin fell 3% to $26,800, and Ethereum stumbled 2.9% to under $1,700.
Binance’s legal troubles in the US could result in stricter regulatory oversight of cryptocurrency exchanges. It is also possible that other countries may follow the US’s lead and increase regulatory scrutiny of Binance and other cryptocurrency exchanges.
According to the CFTC, the lawsuit is part of the agency’s effort to protect investors and maintain the integrity of the derivatives markets.
