Greetings fellow HODLers! Welcome to the Crypto coinundrums weekly digest, your weekly one-stop-shop for all your absurd, mind-boggling, and head-scratch-inducing happenings in the crypto space. We know that keeping up with the fast-paced world of cryptocurrencies can be overwhelming, so we’re here to distill at least some of the madness into a delightful collection of hot topics you won’t want to miss.
Binance Busted: CFTC Crashes the Crypto Party with a Lawsuit Extravaganza
Today, we bring you the riveting tale of the Commodity Futures Trading Commission (CFTC) raining on Binance’s parade. The CFTC has filed a civil enforcement action against Changpeng Zhao (aka CZ), Binance’s enigmatic CEO, and three Binance-affiliated entities, along with the platform’s former chief compliance officer, Samuel Lim. They’re accused of violating the Commodity Exchange Act (CEA) and CFTC regulations left, right, and center.
The CFTC alleges that Binance, under CZ’s watchful eye, has been running an intentionally opaque common enterprise. Apparently, Binance has been engaging in a cunning strategy of regulatory arbitrage, willfully disregarding the CEA to boost its commercial benefits. The CFTC seeks disgorgement, civil monetary penalties, permanent trading and registration bans, and a permanent injunction against further violations. In other words, they’re going for the jugular.
CFTC Chairman Rostin Behnam warned that there’s no location (or claimed lack thereof) that will stop the agency from protecting American investors. The CFTC is on a mission to stamp out misconduct in the wild world of digital assets, and Binance’s alleged violations are in the crosshairs. Gretchen Lowe, CFTC’s Enforcement Division Principal Deputy Director and Chief Counsel, added that Binance’s compliance efforts have been a “sham,” with the defendants actively choosing profits over following the law.
According to the complaint, Binance has executed commodity derivatives transactions for U.S. persons since July 2019. It claims that Binance’s compliance program was ineffective, with CZ instructing employees and customers to dodge compliance controls to maximize profits. At some point in time, the platform reportedly did not require identity verification before trading, despite its legal duty to do so, and failed to implement basic procedures to prevent money laundering and other scary stuff.
The CFTC alleges that Binance taught its U.S. customers, particularly the VIPs, how to evade compliance controls. Additionally, the platform is accused of facilitating derivatives transactions without registering with the CFTC, acting as a designated contract market or swap execution facility.
The complaint goes on to detail numerous supervisory failures, such as instructing employees to communicate with U.S. customers using a messaging app that automatically deleted written communications. The purpose? To avoid leaving evidence of their efforts to retain U.S.-based customers. Sneaky, sneaky!
CZ and Lim are accused of willfully evading the CEA’s requirements, conducting activities outside the U.S. designed to dodge CFTC regulation, and instructing customers on how to bypass Binance’s compliance controls. The complaint paints CZ as the mastermind behind Binance’s misconduct, while Lim is charged with aiding and abetting the violations, undermining Binance’s compliance program, and promoting “creative means” to circumvent controls.
CZ’s response
So we got a bunch of nasty allegations there, what does CZ think of all this? Well, he posted an official statement defending himself against some of the allegations which can only be described as chef’s kiss perfect.
CZ expressed disappointment with the CFTC’s “unexpected and disappointing” complaint, despite Binance’s two-year-long cooperation with the agency. He highlighted a few key points to set the record straight.
First, CZ praised Binance’s best-in-class compliance technology. He reminded us that Binance was the first global (non-US) exchange to implement a mandatory KYC program and that they block US users through an array of methods, from IP address to device fingerprints. According to CZ, no other company comes close to Binance’s level of thoroughness.
Next, he emphasized Binance’s commitment to transparency and cooperation with regulators and law enforcement worldwide. The company boasts over 750 compliance team members, many with prior law enforcement and regulatory backgrounds. CZ proudly noted that Binance has handled 55,000+ law enforcement requests and assisted US law enforcement in freezing/seizing more than $125 million in funds in 2022 alone.
CZ also highlighted Binance’s impressive number of global licenses/registrations (16 and counting) and rejected any allegations of market manipulation or trading for profit. He personally adheres to Binance’s 90-day no-day-trading rule for employees and does not partake in Binance Launchpad, Earn, Margin, or Futures.
In his statement, CZ reaffirmed Binance’s commitment to amicable solutions and collaboration with regulators worldwide. While admitting that Binance isn’t perfect, he expressed confidence in the company’s high standards and dedication to doing right by its users.
CZ has spoken, defending Binance with the flair we’ve come to expect. So what do we make of this? Is this the end of Binance in the U.S? Or just another attempt into scaring the head figures of crypto into submission?
Justin Sun’s Wild Web3.0 Adventure: The Credit Suisse Chronicles
In a plot twist no one saw coming, the crypto-legend Justin Sun, the founder of Tron, has swooped in to propose a daring $1.5 billion acquisition of Credit Suisse, with plans to vault it headfirst into the Web3.0 world. Switzerland, known for its crypto-friendly stance, seems like the perfect playground for Sun’s vision of the future.
In his series of tweets, Sun outlines his grand plan: By transforming Credit Suisse into a crypto-friendly financial institution, he aims to create a new standard for financial innovation that benefits everyone. And let’s be honest, who wouldn’t want to see a bank like Credit Suisse embracing the crypto revolution?
Sun’s proposal comes hot on the heels of UBS’s bid for Credit Suisse, but our intrepid hero has grander ambitions. He envisions a future where blockchain technology and cryptocurrencies are embraced wholeheartedly, with Credit Suisse leading the charge as a crypto-friendly financial institution. Sun aims to transform the traditional bank into a beacon of financial innovation, paving the way for a more innovative and decentralized financial system.
As we hurtle towards a digital and decentralized future, traditional financial institutions are scrambling to adapt and evolve. But Sun isn’t content to sit back and watch – he’s taking matters into his own hands! By acquiring Credit Suisse and integrating it into the crypto-friendly financial landscape of Switzerland, he plans to leverage the country’s progressive policies and position the bank as a leader in financial innovation.
While it could have been a very entertaining and interesting event, Sun’s proposal unfortunately wasn’t taken into consideration and UBS ran off with Credit Suise.
FTX’s Bankman-Fried in Hot Water: A $40 Million Crypto Bribe Drama Unfolds
Crypto enthusiasts, buckle up for a rollercoaster ride as we delve into the latest drama surrounding FTX co-founder Sam Bankman-Fried. Federal prosecutors allege he dished out tens of millions in crypto bribes to at least one Chinese government official. Let’s dive into this sizzling tale!
The indictment claims that in November 2021, Chinese police froze accounts linked to Bankman-Fried’s hedge fund, Alameda Research. With a staggering $1 billion in crypto on the line, Bankman-Fried and his crew reportedly transferred $40 million in digital currency to grease the palms of Chinese officials, hoping to unlock the frozen funds.
Despite exhausting various methods, Bankman-Fried’s efforts hit a brick wall. In a Hail Mary move, he orchestrated the multimillion-dollar bribe, and voilà – the accounts were unfrozen! However, this risky venture led Alameda to go on and gamble with their customer’s funds, eventually causing FTX and Alameda to implode in November 2022.
Alameda CEO Caroline Ellison expressing her cluelessness about risk management
Now, Bankman-Fried faces a federal indictment and civil charges from both the Securities and Exchange Commission and the Commodity Futures Trading Commission. This bombshell follows the recent allegations against Binance for supposedly facilitating terrorist financing and violating U.S. derivatives law.
As we eagerly await updates on Bankman-Fried’s predicament, let’s remember the golden rule of crypto: not your keys, not your coins – and maybe, not your bribes either! Stay tuned, cryptonauts, for more electrifying tales from the wild world of digital currencies.
The Great Crypto Bake-Off: PancakeSwap vs. SushiSwap
And now for the column of the week: In an unexpected turn of events, the founders of PancakeSwap and SushiSwap decided to settle their differences in a high-stakes, crypto-themed bake-off. PancakeSwap’s chef whipped up a mouth-watering stack of Binance Smart Chain-infused pancakes, while SushiSwap’s culinary expert crafted a roll of sushi so elegant, it could’ve been an NFT. Crypto enthusiasts eagerly watched the live-streamed event, placing bets with their tokens on the winner. As the tension rose like a perfectly proofed dough, the ultimate victor was revealed: the crypto community’s insatiable appetite for food-themed finance!
