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Binance and CEO CZ Face Harsh Allegations In Brazil

2 mins
Updated by Kyle Baird
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In Brief

  • A Brazilian congress committee alleges Binance moved $791.7 million USD with little regulatory oversight.
  • It further claims CEO Changpeng "CZ" Zhao established multiple companies in Brazil to evade local financial regulations.
  • The lack of oversight allegedly led to Binance being used in a pyramid scheme, with authorities unable to track users.
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A congress committee in Brazil has accused Binance of being a platform for a fraudulent pyramid scheme while alleging that its CEO, Changpeng ‘CZ’ Zhao, had illicit intentions when establishing multiple companies in the region.

“BINANCE was one of the companies used in the fraudulent financial pyramid scheme attributed to former waiter Glaidson Acácio dos Santos,” the statement declared.

Binance and CZ Accused of Negligent Dealings

In an extensive report, the committee alleges that Binance conducted transactions of approximately USD $791.7 million in Brazil without local regulators having any knowledge of its dealings.

“BINANCE moved BRL 40 billion in 2021 without Acesso, the regulated institution, having any control over who the customers were and whether the origin of the funds was legal.”

Furthermore, it alleges that Binance CEO CZ established multiple companies within Brazil to evade compliance with local financial regulations.

“Changpeng Zhao, set up an opaque network of legal entities, all controlled directly or indirectly by Zhao, with no defined business purpose and with no other purpose than evasion of compliance with the law.”

The committee asserted that this absence of oversight resulted in a range of problems. The most significant of these being that the crypto exchange was utilized in a pyramid scheme.

Furthermore, it references an alleged comment made by Binance’s chief compliance officer. He allegedly stated the company’s desire to evade “regulation at all costs.”

It states that local authorities in Brazil lack the means to track its users:

“Controller Changpeng Zhao claims by the media that the company’s headquarters are wherever it is located at the time, reflecting a deliberate approach to avoid the costs of regulation borne by any legitimate company.”

This coincides with recent allegations in the United States against CZ. A group of investors holds him responsible for the downfall of the crypto exchange FTX.

They declare that CZ’s tweets, issued before the exchange’s collapse, sowed doubts about its liquidity and financial standing. Furthermore, they allege it triggered the surge in withdrawals that ultimately precipitated the exchange’s collapse.

At the time of publication, CZ possesses roughly 8.6 million followers.

Meanwhile, CZ remains embroiled in an ongoing lawsuit filed by the United States Securities and Exchange Commission (SEC) against both him and Binance.

In June, the SEC claimed that Binance and CZ falsely represented trading controls on the Binance.US platform, thereby misleading customers into maintaining their investments on the platform.

Top crypto platforms in the US | February 2024

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Ciaran Lyons
Ciaran is a cryptocurrency journalist based in Sydney, Australia. He particularly enjoys writing about CBDC developments and the practical implementations of cryptocurrency in real-world scenarios. He has also appeared across major television networks in Australia including Channel Ten, Channel Nine and SBS TV. Prior to his foray into cryptocurrency, Ciaran worked as a presenter on national radio station Triple J.
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