Published
1 year ago on
April 21, 2023
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The world’s largest cryptocurrency exchange, Binance, is facing a probe in Brazil, with authorities confirming the launch of an official investigation into the exchange.
Authorities allege that Binance failed to respond to a stop order, directing it to stop selling crypto derivatives.
Binance Accused Of Financial Crimes In Brazil
Brazilian authorities have launched an official investigation into Binance, alleging financial crimes facilitated through its derivatives offerings. Authorities also stated that the exchange failed to respond to a stop order, ordering the exchange to stop selling crypto derivatives. Brazilian media speculated that the probe was launched following a tip-off from the Brazil Securities and Exchange Commission (Comissão de Valores Mobiliários - CVM), the country’s primary market regulator.
According to reports, the Brazil Securities and Exchange Commission informed the Attorney General of Sao Paolo that the cryptocurrency exchange allegedly ignored a “stop order” issued by the state. As a result, the exchange allegedly offered crypto derivatives to Brazil users in violation of the law. As a result of the tip-off, the Federal Police and the Federal Prosecutor’s Office have launched an investigation into the exchange.
Binance Remains Mum
Binance has, so far, refused to comment on the ongoing situation. While the Brazil Securities and Exchange Commission has submitted documents in support of its claims, Binance has categorically denied offering derivatives in Brazil. The exchange stated,
“Binance does not comment on ongoing investigations. However, we do not offer derivatives in Brazil. We take a collaborative approach in working with regulators, and we take our compliance obligations very seriously.”
The Comissão de Valores Mobiliários revealed that it had issued the stop order in 2020, after which the exchange stated that it would cease offering crypto derivatives in Brazil. However, staff members discovered that they could still access derivatives offerings on Binance by changing the language on the Binance app or website.
On its part, Binance added that it was in contact with authorities overseeing the crypto space in Brazil and other jurisdictions around the world.
Troubles Mount For Brazil
Binance has had a difficult start to 2023, with the exchange facing growing headaches thanks to a number of issues. In the first week of April, it was revealed that the Australian Securities and Investment Commission (ASIC) had revoked Binance’s derivatives license. The license allowed the exchange to offer derivatives services to users based in Australia since July 2022. The cancellation of the license came in response to a request submitted by the exchange and took effect immediately. ASIC directed that all derivatives trades and dealings on Binance should cease by the 14th of April.
Just last week, Dubai’s Virtual Regulatory Authority (VARA) requested Binance to provide additional information about the platform’s ownership structure and auditing procedures as it applied for an operating license. It also requested for additional details when it came to the platform’s governance. Binance responded to the request, stating that it had disclosed all necessary replies and answers to VARA on a proactive basis, all of which were in line with its regulatory and fiduciary responsibilities.
Reports also emerged that Binance’s US arm was facing considerable difficulty in securing a banking partner following the collapse of Slvergate Bank and increased regulatory scrutiny on the crypto space. Before the ongoing banking crises, all customer deposits were either sent to Signature Bank or Silvergate Capital Corp. As a result, Binance has informed users that certain USD deposit services will be temporarily unavailable until it transitions to a new banking partner.
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.
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