The crypto world is in turmoil again. The US financial derivatives regulator, the CFTC, on Monday took legal action against the world’s largest cryptocurrency trading platform, Binance and its boss Changpeng Zhao, accused of willfully circumventing US regulations.
This is a new episode in the offensive launched by regulators, the CFTC and the market policeman mainly (SEC), against the practices of players in the cryptocurrency community. They thus seek to compensate for the absence of legislation to regulate this industry, even if several texts are under discussion in Congress. Their offensive accelerated after the November bankruptcy of FTX, the world’s second largest platform.
In the document filed in federal court in Illinois (north), the CFTC claims in particular that Binance be prohibited from registering and selling certain financial products in the United States.
“CZ” counterattack
Binance and its boss “CZ” have called the lawsuit of “unexpected” and “regrettable”, indicating to have collaborated with the CFTC for “more than two years”, according to a reaction sent to AFP. “We plan to continue working with regulators in the United States and around the world,” the group said.
At the end of 2022, Changpeng Zhao rose to the forefront of the cryptocurrency scene during the sinking of one of its rivals, the exchange platform FTX. As the horizon darkened for FTX, CZ had claimed on Twitter a proposed takeover, before canceling the transaction. “I tried, but…” he then tweeted before adding a crying face emoji.
CZ has since called his ex-rival, former FTX boss Sam Bankman-Fried, a “psychopath,” who is now facing US charges of bank fraud, money laundering and ten other charges. Binance is not free from controversy, however.
No global headquarters
Several investigations by the Archyde.com agency revealed at the end of 2022 that the platform had served as a vector for money laundering or the transit of funds belonging to nationals of countries affected by American sanctions.
While Binance has strongly denied most of these accusations, it has admitted to having had “interactions” with users of Iranian cryptocurrency exchanges, without specifying the number of accounts or the sums involved.
Binance was also the victim of a hack in October, the magnitude of which was estimated at around $100 million. Moreover, the fact that the company does not have a global headquarters, despite open offices in Paris, Abu Dhabi, Dubai and Bahrain, already questioned several regulators. The UK authorities thus considered as early as 2021 that the group’s activities could not be properly supervised and posed a risk to consumers.
Born in China, the 45-year-old leader emigrated with his family to Toronto in the late 1980s and acquired Canadian citizenship. In several interviews, he cultivates his image of “self-made man” and insists on his modest beginnings, claiming to have been a cook at McDonald’s and a gas station attendant.
Poker
After studying computer science in Montreal, CZ worked in Tokyo and New York before moving back to China for a while. He claims to have heard about cryptocurrencies for the first time in Shanghai around a poker table in 2013. Four years later, he launched Binance, a trading platform that would experience a lightning success.
With more than 120 million customers, the group is today, by far, the largest player in the sector in terms of trading volume. CZ’s fortune is estimated at $10.5 billion by Forbes magazine, making him the 167th richest person on the planet. It nevertheless melted in a year and a half with the collapse of the cryptocurrency market.
CZ cultivates a casual style and wears in most of his appearances a black polo shirt with the Binance logo, which he also got tattooed on his right arm. The leader expresses himself extensively on Twitter, sharing with his 8.3 million subscribers his perspectives on cryptocurrencies, news from his company, but also humorous publications.
A mode of communication reminiscent of that of Elon Musk, the owner of the social network with the blue bird. Binance has also paid half a billion dollars to help the bubbling entrepreneur buy the platform.
Asked by AFP last summer about the comparison with the boss of Tesla and SpaceX, whom he has never met in person, CZ played the card of humility. “Elon is a much stronger entrepreneur,” the Binance boss had said. “I’m a more normal guy. »