CFTC Probes Binance Over U.S. Residents' Transactions

The Commodity Futures Trading Commission (CFTC) is probing Binance Holdings Ltd., the largest cryptocurrency exchange by volume, concerning transactions that were allegedly carried out by U.S. residents.

According to the report, the CFTC is investigating Binance to find out if U.S. residents traded on the crypto platform.

CFTC Scrutinizes Binance Concerning Violation of U.S. Rules

The reason for the probe is to ensure that U.S. residents did not go against the rules which prevent them from trading on Binance. For that reason, the agency is examining Binance to determine if the crypto firm allowed U.S. residents to buy and sell derivatives, according to sources. As Binance is not registered with the CFTC, placing wagers on Binance by Americans is a violation of the U.S. rules. The CFTC is the federal body in charge of regulating commodities, and it views cryptocurrencies as commodities.

According to sources familiar with the matter, the probe is confidential. Therefore, the sources asked not to be identified. It is pertinent to note that Binance has not been accused of any wrongdoing. Therefore, the investigation may not result in an enforcement action.

Binance has said it has blocked U.S. residents from gaining access to its website. Binance added that it goes even further by examining all deposits and withdrawals to find out any traits leading to illicit transactions. Binance has also said that the company is very serious concerning its compliance obligations. The CFTC, however, has declined to comment.

Possible Impact on U.S. Investors

The crypto industry has ambitions of becoming the best choice for U.S. investors. However, this investigation shows that government agencies may try to hinder the spread of crypto amongst U.S. investors. As already stated, for the CFTC, cryptocurrencies such as Bitcoin and Ethereum are considered commodities. Therefore, the agency claims to have jurisdiction over crypto futures and derivatives.

For this reason, strict customer protection is placed on crypto platforms that cater to Americans. For the CFTC, it does not matter if an exchange is based in another country. As long as U.S. residents are allowed to trade on a platform, that platform has to adhere to U.S. regulations.

Changpeng Zhao (CZ), the co-founder of Binance, has said that the company follows the American rules closely. He went on to add that the company has put special features in place to prevent its customers from fraudulent activities. While speaking during an event on Clubhouse, he refused to comment on the matter concerning the CFTC investigation. His response was to say, “We’ll continue to improve our compliance. We’ll also work very actively with regulators around the world to improve the compliance standards of the industry.”

This scrutiny portrays the increasing investigations on crypto activities in the United States. BitMEX has previously been sued by the CFTC for its failure to register as a broker. This also led to a decline in the exchange’s market share as it has become a target of regulatory scrutiny. Last month, the biggest crypto exchange in the U.S., Coinbase Global Inc., also revealed that it was being probed by the CFTC.

Binance Activities in the U.S.

Binance established the Binance.US platform in 2019, which is based in San Francisco. Zhao has pointed out that the San Francisco-based Binance.US is an independent entity for American customers. The establishment holds multiple state licenses, and it’s also registered with the U.S. Treasury’s Financial Crimes Enforcement Network.

Zhao also pointed out that illegal trades are still likely to occur. Speaking in an interview with Bloomberg last November, Zhao said, “We have always blocked U.S. access, but users do find intelligent ways to get around our block sometimes and we just have to be smarter about the way we block.”

Currently, the U.S. Treasury Department is planning on enforcing new rules that will ensure banks keep records on crypto investors.

BNB Price

As of the time of writing, Binance Coin price was $247.21, with a 24-hour trading volume of $3,629,745,575. BNB price also dropped by 6.9% over the last 24 hours. Besides, it has a circulating supply of 154.5 million BNB coins and a max supply of 170.5 million. Binance is also the current most active market trading BNB.

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