The cftc is the one filing the suit in Chicago today, both against Binance, which is the largest crypto exchange in the world, and its CEO CZ. The largest cryptocurrency exchange in the world, Binance, has just been caught. CZ.
Binance, the founder, has just been charged because, as of today, the cftc sued Binance and CZ over willful evasion of U.S. laws as well as unregistered crypto derivatives products. The regulator is saying that Binance shirked its obligations by not properly registering with it The CFTC alleges that Binance offered unregistered crypto derivatives products and directed U.S. customers to evade compliance controls through the use of vpns.
The CFTC basically tells users to use things like vpns to get outside of U.S. jurisdiction, and Binance hasn’t properly registered. Carl mentioned the filing, so let me read you a portion of it because it is very fascinating.
They say that Binance’s reliance on a maze of corporate entities that operate the Binance platform is deliberate and is designed to obscure the ownership control and location of the Binance platform. The CEO of Binance answers to no one but himself and certainly doesn’t answer to the U.S. Regulators because Binance isn’t located here and U.S. operations make up a very small portion of its business.
If you hold cryptocurrency, this affects you, and by the way the CSD of Binance has responded, I’ll share with you his statement, but very quickly, what are the details? The lawsuit filed in the U.S. District Court of Illinois on Monday alleges, number one, that Binance operated a derivatives trading operation in the U.S. They offered trades for cryptocurrencies including bitcoin, ethereum, litecoin, tether, and busd, which the suit referred to as commodities.
So I like that this lawsuit calls bitcoin a commodity and ethereum and litecoin commodities, not securities. That’s interesting, but they say that Bin Hey, you operated a derivative exchange in the United States so you obviously have to register, which you never did.
This suit also alleges that the company under this leadership directed its employees to spoof their location through the use of virtual private networks vpns, so not just the customers of the exchange but also Binance employees were using VP ends to get around certain regulation.
On top of that, they’re also charging Binance with not implementing know your customer or anti-money laundering processes and having a poor anti-evasion programme, and by the way they actually back up these allegations with internal chats.
I’ll share with you some direct messages from their Chief Compliance Officer at Binance, of course, alleging all these are just allegations thus far, essentially saying that Binance directed U.S. customers to use a VPN in so many words, and in a direct quote from the lawsuit, Binance has instructed U.S. customers to evade such controls by using vpns to conceal their true location.
The use of VPNs by customers to access and trade on the Binance platform has been an open secret and Binance has always been aware of this and has always encouraged its customers to use VPNs. I think having clear regulatory and regulatory clarity is very important for the industry to continue to grow, so I think having that is very important, and the final thing I’ll share with you before we get to CZ before we get to the latest Michael Saylor news is that some of these alleged internal chats from Binance are wild.
The filing pointed to internal chats between Binance employees, including Samuel Lim, the exchange’s chief compliance officer through January 2022, who is also a defendant by the way and who is also getting sued with CZ with the exchange where Lim appeared to direct an employee to ask U.S. customers to hide their location.
In a direct quote allegedly from Lim, in the suit also alleges that the exchange was well aware that sanctioned entities and individuals from sanctioned regions were trading on its platform sharing chatlogs where, Lim said terrorists usually send small sums that are barely enough to purchase weapons with he also said, other customers were here for crime and how did the cftc gain access to all these messages well according to the suit while binance employees including CZ by the way used The Signal app with an auto-confirmation feature In any case, CZ kept it short and sweet, simply responding with the number four.
This refers to his pinned tweet from the beginning of the year, which says we’ll try to keep 2023 simple. Spend more time on fewer things: number one, spend time on education, and number two, comply. three products and services, and four, ignore the thudding fake news attacks. Etc in the future would appreciate it if you can link this post when I tweet four now the Michael Saylor news today binance is Building Products Financial products where you don’t need the traditional system—and obviously the traditional system regulators have an issue with that—the best case scenario would be they just get hit with a heavy fine.
Binance has the money, and I’m sure they’ll gladly pay it off to brush this past them. The worst-case scenario would be that CZ or other high-ranking officials go to jail. Of course, to do that, you have to find them, and nobody knows quite where these individuals are.
Binance has no headquarters to explain at STD. I headquarter is a concept where you don’t necessarily need to be in the office to be productive, and by the way, some people are saying that the worst outcome potential of all this is that Binance gets banned outright in the US, but I have news for you: Binance is already not allowed in the US, that’s why we have Binance.
When you look at the domain daily video, that’s the U.S regulated entity separate company. microstrategy Michael Sailor’s company repays their silvergate loan while also spending a fresh $150 million on more Bitcoin. This is all public information in their latest SEC filing.
First, the software company MicroStrategy has fully prepaid the 160 million dollar outstanding balance on its 205 million dollar loan from Silvergate Bank, so they are completely out of Silvergate, which is good.
The second one is security, and the third one is evm equivalency or evm compatibility, meaning that it’s interoperable with Ethereum, and all three are equally important, and just to get very specific on what ZK evm technically is, ZK evm technologies batch transactions on so-called roll-ups into a zero knowledge proof, hence the ZK, and then execute those proofs on Ethereum.
In essence, that means that by reducing transactions into smaller pieces of data, this technology helps keep ethereum relatively unclogged with activity, and then of course the news today is that Polygon Matic finally has this, they’ve launched their final maintenance.
