- Binance previously faced warnings regarding its derivatives trading services.
- The committee also suggested an investigation into the local unit’s tax compliance at the exchange.
The world’s largest cryptocurrency exchange, Binance, is facing mounting regulatory challenges in Brazil. A Brazilian congressional committee, consisting of 28 legislators from the lower house of the National Congress of Brazil, has called for the indictment of Binance CEO Changpeng Zhao, also known as CZ, along with three other top Binance executives. The allegations against them are grave, spanning from allegations of fraudulent management to the illegal sale of securities. This report was shared by Bloomberg and sheds light on the tumultuous situation.
Probing Tax Compliance and Regulatory Concerns
The Brazilian congressional committee recommended a thorough investigation into Binance’s tax compliance within Brazil. They also emphasized the need to scrutinize a separate unit known as Binance Capital Management.
Additionally, the representatives called upon Brazil’s securities regulator, Comissão de Valores Mobiliários (CVM), to look into Binance’s derivatives business, which they claimed continued to operate despite previous warnings.
It’s worth noting that Binance was already asked to suspend its derivatives trading services in Brazil back in 2020. This request came about because Binance lacked the necessary approval to conduct such operations. In Brazil, all derivative products are considered securities, regardless of the underlying assets.
The recommendations from the Brazilian congressional committee were bold, with legislator Ricardo Silva, who led the committee, stating that Binance’s operations were “surrounded by suspicion.” However, it’s important to note that these recommendations are not legally binding, leaving it to local law enforcement to decide whether to pursue an investigation.
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Binance’s Global Regulatory Struggles
This development adds to a series of regulatory challenges faced by Binance in 2023. It’s not just Brazil; the cryptocurrency giant has encountered legal hurdles in various other regions. The United States, for instance, has been a battleground for Binance, with the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) taking legal action due to concerns about compliance with its spot and derivatives offerings.
But Binance’s woes are not confined to the United States. Several other major markets, including Canada, the United Kingdom, Australia, the Netherlands, and Germany, have also taken action against the exchange due to irregularities and non-compliance.
Summary
Binance is facing increasing scrutiny in Brazil as a congressional committee calls for the indictment of its CEO and other top executives. Allegations of fraudulent management and illegal sale of securities have brought Binance under the regulatory spotlight in yet another country.
While the recommendations from the committee are not legally binding, they add to the growing list of regulatory challenges faced by Binance globally. The cryptocurrency exchange continues to grapple with legal action and investigations in various jurisdictions, including the United States, Canada, the United Kingdom, Australia, the Netherlands, and Germany. It will be interesting to see how Binance will handle these legal challenges in the near future.
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