The Commodity Futures Trading Commission (CFTC) lawsuit against Binance, the largest crypto exchange by trading volume, is a “big deal,” in the words of Timothy Massad.
“If you read the complaint, there is so much detail in it. This suggests [CFTC] had some information from people in the company,” said the regulator’s former chairman, now a research fellow at Harvard University’s John F. Kennedy School of Government. He told CoinDesk TV’s First Mover on Tuesday that the level of detail was “really quite noticeable.”
The CFTC, which is responsible for regulating the US derivatives markets, on Monday filed a lawsuit against Binance and its founder, CEO Changpeng Zhao, for allegedly offering unregistered derivatives products and helping US customers pass compliance controls bypassing the use of virtual private networks (VPN).
“This complaint essentially states that Binance and Zhao themselves have been intentionally and systematically cultivating US business, helping US citizens circumvent these restrictions, and even doing things internally to try to hide how much US business they do,” said Massad, also director of Digital Assets Policy Project.
In a response to a blog post, Zhao said the complaint “appears to contain an incomplete statement of facts,” adding that the exchange “disagrees with the characterization of many of the issues alleged in the complaint.”
Will the CFTC’s lawsuit against Binance finally prompt congressional lawmakers to enact legislation regulating the crypto industry in the US? Massad said it was unlikely.
“I don’t see any movement toward consensus in Congress,” said Massad, who headed the CFTC for nearly three years during the Obama administration.
“I think there are really very different views from those who are very skeptical about crypto and don’t want to pass legislation that they think would overly legitimize it, and those who… believe in the innovative potential and would like to see more regulatory clarity and maybe rules that allow for more innovation,” he said.
Meanwhile, it will be some time before the agency’s claim against Binance goes to court, he said. For now, at least, “we just have to watch as these enforcement actions play out.”