Binance Accused of Allowing U.S. Firms to Circumvent Derivatives Trading Ban

The Commodity Futures Trading Commission (CFTC) has charged Binance with permitting US-based trading companies to trade cryptocurrency derivatives on Binance’s global platform.

It is clear that Binance’s own policy, according to which Americans are not permitted to trade on Binance.com, is being broken by granting US-registered companies access to the platform of the future.

The US companies allegedly used offshore organizations and a number of other techniques to reach Binance.com, according to the CFTC. 

The authority countered that Binance intentionally permitted this to occur.

In order to service US traders, Binance established Binance.US, a distinct cryptocurrency exchange that, at least in Binance’s opinion, conforms with US laws.

The CFTC made the allegations in the complaint against Binance that was submitted on Monday of this week.

Binance experienced net withdrawals of about $2.2 billion in the seven days after the complaint, which CZ referred to in a post as “a bit of net outflow.”

The CFTC claimed in the complaint that Binance had given some of its biggest VIP customers benefits such as faster transaction execution in addition to charging it of permitting US traders on its global platform.

In one case, the CFTC claimed that Binance provided a New York-based trading company with VIP status an edge over non-VIP customers by 5 to 10 milliseconds. 

Unnamed but referred to as “Trading Firm B,” the company was claimed to be one of Binance’s biggest customers.

On Thursday, Joe Saluzzi, an associate at stock brokerage Themis Trading, commented on the disclosures to the Wall Street Journal. He said that this kind of edge could be used by the customer to make more money at the cost of others.

“If I was one of their other clients, I’d be a bit upset,” he said.

Disappointing Lawsuit

Changpeng Zhao, CEO of Binance, has not commented on the claims that US traders were permitted on Binance.com. 

However, he added that his business had “worked cooperatively with the CFTC for over two years” and termed the case “unexpected and disappointing.”

“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,” CZ wrote in a statement published on Binance’s website.