Binance is apparently facing more pressure from regulators due to possible abuse in its cryptocurrency exchange. Bloomberg sources said U.S. officials had extended their investigation into Binance to possible insider trading and market manipulation. The company has not been accused of doing anything wrong, but Commodity Futures Trading Commission investigators have reportedly asked potential witnesses about issues such as the location of Binance servers (and therefore whether the US can prosecute cases).
The commission has previously launched an investigation into the sale of derivatives linked to cryptocurrencies. It is reportedly looking for internal Binance data that could show the sale of the derivatives to US customers, which violates the regulations prohibiting the sale without registrations. The Department of Internal Revenue and Justice is also investigating possible money laundering on the stock exchange.
There are no guarantees for action. The CFTC and the Department of Justice have been investigating Binance for months, and any decisions could take some time.
Not surprisingly, Binance said it’s top notch. A spokesman said Bloomberg the exchange has a “zero-tolerance” approach to insider trading, as well as ethical codes and safety guidelines to prevent these actions. The company added that it fires offenders at a minimum. The CFTC declined to comment.
The larger investigation into Binance, if it were accurate, would come as part of a larger U.S. restriction on cryptocurrencies. Officials are concerned that the lack of consumer protection (including regulation) could harm customers who sign up for services and expect the same security measures as with regular money. In this case, the focus is on liability – insider trading can destroy valuable investments and undermine confidence in Binance and other crypto exchanges.
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