Binance is perhaps the most well-known name in crypto and is the largest exchange, founded in 2017 by “CZ” Binance has become a household name and it’s the go-to exchange for all things crypto-related.
Sounds great doesn’t it?
Unfortunately, it isn’t as polished as it sounds, as of recent times the exchange has been facing regulatory issues and lawsuits putting a dampening on the entire crypto space.
In this article, we’ll take a look at the three most recent events that have made many raise their eyebrows about the Binance operation.
- Interpol Red Notice
- Shilling lawsuit
Binance is facing a lawsuit against the Commodity Futures Trading Commission (CFTC) for allowing US residents to trade derivatives on Binance without the exchange being registered with the CTFC as a futures commission merchant.
The CFTC claims that between September 2019 and May 2021, Binance offered US citizens the ability to trade crypto futures contracts while Binance was not registered with the CFTC which is required under US law.
While Binance was not registered with the CFTC it is claimed that they advertised to customers that they are, this is a false or misleading claim which they are also accused of making.
The lawsuit is ongoing and we have not heard much from CZ the founder of Binance regarding it. As of now, we know that the CFTC is seeking both monetary penalties and injunctive relief against Binance. They also want Binancee to be banned from trading in the US, this will be quite a big blow against the US customers and the cryptocurrency community.
Interpol Red Notice
This news or should I say rumor appeared just today on Twitter by the well-known cryptocurrency user “cobie”, claiming that the Binance founder today receded what is called a red notice from Interpol.
The rumor was started by Cobies tweet as he tweeted an encrypted message with the suppose red notice encrypted in SHA-256 which is the same cryptography that secures a lot of the cryptocurrencies we use.
While this has not been confirmed and CZ claims it is fake and has been photoshopped it could be something worth keeping an eye on. This rumor coming to light just days after the CFTC lawsuit has put even more pressure on the markets as a whole and continues to waver people’s trust in both CZ and Binance the exchange.
As if a CFTC lawsuit and Interpol Red Notice weren’t enough, a lawyer has recently issued Binance and several celebrities with a lawsuit for “shilling” the platform and cryptocurrencies.
After a year-long investigation lawyers are now seeking $1 billion dollars in damages after Binance paid celebrities to advertise and “shill” unregulated securities. The lawsuit is filed by The Moskowitz Law Firm and Boies Schiller Flexner.
The lawsuit mentions a range of celebrities and influencers including the Miami Heats Jimmy Butler alongside crypto Youtube influencers Ben Armstrong and Graham Stephen, this follows a lawsuit being issued against a dozen crypto Youtubers related to promoting the fallen crypto exchange FTX.
Not a good year to be a crypto Youtuber.
As the biggest crypto exchange in the world with a referral and affiliate program there could be dozens of high-profile users involved in this lawsuit for receiving kickbacks for getting people to sign up to Binance under their referral or affiliate link.
So what can we make of the above lawsuits and regulatory issues?
With the crypto industry being rather new and in a sense in a grey area when it comes to regulation it is hard to say how these events will unfold. In a lot of cases, the government or department themselves are not sure how to handle crypto related cases.
The Interpol Red Notice could very well just be a rumor intended to cause FUD however the other two are official cases with the paperwork being filed. Only time will tell.
There is a lot of uncertainty in the market with Binance being under so much fire by regulators currently as everyone waits to see how it unfolds.