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US Authorities Probe Binance Amid Allegations Of Insider Trading And Market Manipulation

US Authorities Probe Binance Amid Allegations Of Insider Trading And Market Manipulation

Several reports have emerged regarding US authorities expanding their investigation into Binance. Similar reports of investigations had emerged in the first quarter as well but were denied by the CEO as FUD. 

However, new reports confirm that Binance is under investigation by the CFTC for insider trading and market allegations. 

Numerous Regulatory Headaches 

Binance looks to be going through an extremely turbulent phase, with regulatory authorities the world over intensifying their scrutiny of the world’s largest cryptocurrency exchange. Authorities in the US are the latest to join the growing list, with the US Commodity Futures Trading Commission (CFTC) launching an investigation into Binance Holdings and alleged insider trading and market manipulation practices. It is also a significant point to note that the CFTC is investigating Binance’s global platform and not its US subsidiary. 

Non-compliance And Unlicensed Operations

Binance has been pulled up for non-compliance with regulatory laws and unlicensed operations in several countries such as the UK, Hong Kong, Malaysia, Japan, Singapore, and Thailand. Due to severe pressure by regulatory bodies in the above-mentioned countries, Binance has implemented a slew of reforms and new initiatives to promote regulatory compliance and responsible trading practices. 

Binance has reduced withdrawal limits and introduced a tax report system. The exchange also temporarily halted or limited the services it was offering in specific world regions as it introduced stricter verification rules and requirements. 

The Biggest Test For Binance 

Many speculate that the US regulatory authorities will be the biggest test faced by Binance, with serious allegations of insider trading and market manipulation, meaning the allegations will have severe consequences for the exchange if proven to be true. US regulators are looking into the top executives at Binance that have profited from insider information. 

Binance Issues Denial 

Binance has already issued a strong statement denying the allegations, with a spokesperson for Binance stating that the company has zero tolerance for inside information. The exchange further stated that if anyone associated with Binance indulged in insider trading and market manipulation would face termination and full consequences from the law. 

“Binance responded to the media that Binance has implemented a zero-tolerance policy for insider trading, and the Binance security team has established procedures for investigating and prosecuting people involved in similar behaviors.”

Binance also stated that its security teams have established long-standing guidelines that investigate and deal with any kind of wrongdoings and holding employees accountable. 

No Word From The CEO 

Binance CEO Changpeng Zhao has maintained a studied silence thus far and has not made any statements regarding the investigations as yet. However, in the past, Zhao has often stated that Binance is willing to work with regulators all over the world, going as far as to suggest that he could step down for a more compliant leader at the helm that could work with regulators. 

After just three months of assuming charge, the resignation of Binance US CEO, Brian Brooks, was widely viewed as a sign of regulatory troubles ahead for the exchange. Brooks had resigned, citing differences over strategic direction. Brooks was a former Comptroller of the Currency in the Trump administration and gave Binance significant legitimacy in dealing with regulators. 

Pushed Towards Centralization 

Under intense pressure from several regulators, Binance CEO Changpeng Zhao has stated that Binance may need to become a licensed financial institution so it could pacify regulators, with the exchange aiming to have a centralized headquarters soon. In an article on the South China Morning Post, Zhao elaborated how Binance could placate regulators with a strategy of centralization.

“As we run a centralized exchange, we have come to realize that we need to have a centralized entity to work well with regulators. We need to have clear records of stakeholders’ ownership, transparency, and risk controls.” 

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.