Investigators Expand Probe Into Binance Over Insider Trading

Binance denied the allegations and confirmed an explicit zero-tolerance policy for any illegal activity of this nature.

CFTC Checks In

Investigations into Binance Holdings Ltd. by authorities in the United States have widened to include possible insider trading and market manipulation.

As reported by Bloomberg’s Tom Schoenberg on September 17, the Commodity Futures Trading Commission (CFTC) has been conducting a review that involves contacting witnesses to probe foul play by the cryptocurrency exchange. 

“[The scrutiny is related to whether] Binance or its staff profited by taking advantage of its customers,” said persons familiar with the matter according to Bloomberg.

Although Binance is based in the Cayman Islands and operates in jurisdictions around the world, the US government wants to know if Binance exploits access to financial data for profit. 

Active Compliance

Lately, Binance has taken a more proactive approach to compliance, according to statements made by Binance CEO Changpeng Zhao (CZ) in an interview last week. A Binance spokesperson told Bloomberg in a statement that the exchange has a “zero-tolerance” policy for insider trading and also employs a “strict ethical code” to prevent any misconduct that could negatively impact its crypto or its users.

Source: Binance CEO Changpeng Zhao

Binance has been under examination from the CFTC and the Justice Department (DOJ) for several months now. Authorities in the US have come down harder on the crypto industry in recent weeks, but enforcement continues to be elusive and cached into litigation and edicts rather than policy. 

The US government could do well to look at its own Congress in regards to the matter. There was a massive insider trading scandal in 2020 by US Senators that was swept under the rug. The United States is wrought with insider trading, so the DOJ and CFTC should already have plenty of work to do.

The scrutiny seems a bit of a stretch, but Binance has been facing compliance probes in other countries for a variety of reasons. With massive growth has come scrutiny for the largest crypto exchange that barely existed a year ago.

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