Binance CEO Changpeng “CZ” Zhao has dismissed allegations from the Commodities Futures and Trading Commission, arguing that the crypto exchange “under no circumstances trades for profit or “manipulates” the market.”
In a March 28 blog post, the chief executive officer responded to the CFTC’s lawsuit accusing Binance and CZ of engaging in improper compliance procedures and trading, calling the allegations “an incomplete representation of facts.”
In its complaint, the CFTC alleged that Binance traded on its own platform using 300 “house accounts” and failed to properly disclose to its customers in its terms of service that it traded on its own market.
The CFTC has also accused Binance of keeping the information “top secret,” claiming the exchange refused to respond to investigative subpoenas issued by the commission to obtain information about its trading activities.
Excerpt from the March 27 CFTC complaint. Source: US District Court
“To the best of its knowledge and belief, Binance has not subjected the trading activities of Merit Peak, Sigma Chain, or its approximately 300 house accounts to fraud or manipulation,” the statement added.
However, CZ argued that while Binance is “trading” in a number of situations, it mainly consists of converting its crypto earnings to cover fiat or other cryptocurrency expenses.
“Personally, I have two Binance accounts: one for the Binance Card, one for my crypto holdings. I eat our own dog food and store my crypto on Binance.com. I also need to convert crypto from time to time to pay for my personal expenses or for the card,” he added.
CZ also dismissed claims that its employees were involved in “insider trading,” stating that Binance has a 90-day no-day trading rule for employees, adding:
“This is to prevent employees from taking action. We also prohibit our employees from trading in futures.”
He further explained that employees are prohibited from buying or selling coins if they have received “private information” about them.
“I myself strictly adhere to these guidelines. I have also never participated in Binance Launchpad, Earn, Margin or Futures. I know I’m best using my time to build a solid platform that serves our users,” he added.
Zhao called the latest CFTC filing “unexpected and disappointing” having worked with the regulator for over two years.
Regarding compliance allegations, CZ said Binance.com has developed “best-in-class” technology to ensure compliance and currently employs more than 750 people working to keep its business within the boundaries of money laundering ( AML) works and knows their customers (KYC) laws:
“To date, we have processed more than 55,000 LE requests and assisted the US LE in freezing/seizing more than $125 million in funds in 2022 alone and $160 million so far in 2023.”
Related: CFTC calls ETH a commodity in the Binance suit, underscoring the complexity of the classification
CZ also pointed out that Binance.com holds 16 licenses to provide digital asset trading services, the most of any cryptocurrency trading platform.
This is an evolving story and more information will be added as it becomes available.