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CFTC Investigating Potential Insider Trading Allegations at Binance

2 mins
Updated by Ryan James
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In Brief

  • The U.S. government has expanded the Binance investigation to address insider trading allegations.
  • The latest Commodity Futures Trading Commission (CFTC) probe follows investigations by the Internal Revenue Service (IRS) and Department of Justice (DOJ) from earlier this year.
  • No formal accusations have been levied against Binance by any of these organizations, pending the conclusion of these investigations.
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The United States Commodity Futures Trading Commission (CFTC) has instigated a probe into allegations of insider trading occurring within cryptocurrency exchange, Binance Holdings Ltd.

According to a report published on Bloomberg, Investigators have revealed that these latest allegations concern whether “Binance or its staff” have taken “advantage of its customers” by using publicly undisclosed insider information to illicitly reap profits through market manipulation.

Binance has issued the official response to these allegations, reaffirming that, “At Binance, we have a zero-tolerance policy for insider trading and a strict ethical code related to any type of behavior that could have a negative impact on our customers or industry.”

This probe represents an expansion of an ongoing investigation into Binance by government authorities in the USA, with the country’s Department of Justice (DoJ) and Internal Revenue Service (IRS) currently looking into claims of money laundering and tax fraud occurring unchecked by staff members at the word’s largest crypto exchange. It should be noted that the US authorities have also made it clear that Binance has not been accused of any wrongdoing, and that the conclusions of these investigations are still to be confirmed.

These allegations fit into a greater narrative of regulatory scrutiny in both the USA and worldwide between government authorities and Binance, which is the world’s most popular exchange.

Headaches with global regulators

Binance has been facing regulatory scrutiny all around the world, with 2021 being a particularly challenging year for the company in this regard. Just a couple of weeks ago, the company published a statement responding to a warning published by the South African Revenue Service (SARS) through its ‘Binance Africa’ division. This warning was issued to investors in the country, citing a lack of official authorization to offer intermediary services or financial advice.

The crypto exchange has also faced PR troubles this year due to adverse warnings and other negative sentiments broadcast by regulatory authorities in countries such as Singapore, the United Kingdom, Brazil, Lithuania, Hong Kong, and Italy. They have also been removing trading pairs between cryptocurrencies and specific fiat currencies this year, including the Singapore Dollar, Korean Won, Australian Dollar, Euro, and Pound Sterling.

Binance moving in the right direction?

Despite these warnings and ongoing investigations, there have not yet been any official rulings against Binance regarding fraud, insider trading, or money laundering. Nor has the company been convicted subsequently to any of the warnings put out by the USA or elsewhere.

Binance has also been making changes to its internal processes and leadership staff following the difficulties and poor relations it has faced with international financial authorities in 2021. Furthermore, the company’s CEO has been reported to be cooperating with regulators towards achieving the goal of worldwide license acquisition.
Additionally, the company is preparing for an Initial Public Offering within the next three years. In other Binance news, the company also appointed a new president to its Binance.US branch earlier this month.

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