Binance is apparently facing more pressure from regulators about potential abuses on his cryptocurrency exchange. Bloomberg sources said US officials have expanded their investigation into Binance to include possible insider trading and market manipulation. The company has not been charged with any wrongdoing, but Commodity Futures Trading Commission investigators have reportedly informed potential witnesses about things like the location of Binance servers (and thus whether the US can prosecute any cases).
The committee had previously launched an investigation into the sale of derivatives linked to cryptocurrencies. It is reportedly seeking internal Binance data that could show the sale of those derivatives to US customers, violating regulations banning those sales without registrations. The Tax and Customs Administration and the Ministry of Justice are also investigating possible money laundering practices on the stock exchange.
There are no guarantees of action. The CFTC and the Department of Justice have reportedly been investigating Binance for months, and any decisions could take a little longer.
Not surprisingly, Binance said it was above board. A spokesperson told Bloomberg the exchange had a “zero-tolerance” approach to insider trading, as well as codes of ethics and security guidelines to prevent those actions. The company added that it will fire violators at a bare minimum. The CFTC declined to comment.
Binance’s increased scrutiny, if accurate, would come as part of a greater US crackdown on cryptocurrencies. Officials are concerned that the lack of consumer protections (including regulations) could harm customers who sign up for services that expect the same safeguards as with conventional money. In this case, the focus is on liability – insider trading can destroy valuable investments and erode trust in Binance and other crypto exchanges.