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US CFTC Sues Binance and CEO for Allegedly Breaking Trading and Derivatives Rules

Binance Holdings Ltd, the largest cryptocurrency exchange, and its CEO Changpeng Zhao have been sued by the US Commodity Futures Trading Commission (CFTC) for allegedly violating trading and derivatives regulations. The CFTC has filed the lawsuit in the federal court in Chicago. The regulator alleges that Binance neglected its obligations by not registering properly with it.

The CFTC has been investigating Binance's activities since at least 2021 regarding the failure of the exchange to restrict US residents from trading crypto derivatives. According to CFTC rules, platforms must register with the agency if they allow Americans to trade such products.

Picture: Kumaon Jagran

Binance is under the scanner of several US regulatory bodies, including the Internal Revenue Service (IRS) and the Securities and Exchange Commission (SEC), who are examining the exchange's compliance with anti-money-laundering regulations and its support of trading unregistered securities, respectively.

The lawsuit is a blow to Binance, which has been expanding its offerings in recent years and is one of the largest cryptocurrency exchanges globally. The exchange has a presence in over 180 countries and handles billions of dollars in cryptocurrency trades daily.

Binance has faced regulatory challenges in other countries as well. Regulators in the UK, Japan, and Germany have warned the exchange to halt operations or face penalties for not complying with local rules.

The CFTC's lawsuit adds to the mounting regulatory pressure on Binance and the wider cryptocurrency industry, which has come under scrutiny from governments worldwide. As cryptocurrencies continue to gain mainstream adoption, regulators are looking to tighten their grip on the industry to prevent money laundering and other illegal activities.

Cryptocurrency exchanges and other platforms are under increasing pressure to comply with regulations to maintain their legitimacy and avoid regulatory action. The outcome of the CFTC lawsuit against Binance will be closely watched by industry participants, as it could set a precedent for how regulators handle similar cases in the future.

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