- A Brazilian congressional committee has recommended the indictment of Binance CEO Changpeng Zhao and three other executives.
- The committee alleges their involvement in fraudulent and suspicious financial activities.
- The new allegations add to Binance’s growing troubles amid regulatory crackdown.
Throughout 2023, recent events have been anything but smooth for cryptocurrency exchange Binance. Global regulatory crackdown has brought the exchange under intense scrutiny, as it faces lawsuits, license suspensions, and full-on market exits.
The exchange is once again in the spotlight as the focal point of Brazilian authorities’ ire, further fueling the flames of its ongoing regulatory challenges.
The Brazilian Probe
A Brazilian congressional committee, which had been investigating crypto-related Ponzi schemes, has recommended the indictment of Binance CEO Changpeng Zhao, and three other top executives, Daniel Mangabeira, Guilherme Haddad Nazar, and Thiago Carvalho.
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Led by deputy president Ricardo Silva, the committee’s extensive 509-page report released on October 10th, accuses Binnace and its executives of a wide range of financial misdeeds. The allegations include suspicious management practices, unlicensed securities trading, and unauthorized operations.
The report revealed that Binance moved a staggering R$40 billion in 2021 with no regulatory oversight, raising questions about the legality of the exchange’s activities.
It further stated that Zhao and the three executives had established a complex network of over 120 legal entities in various jurisdictions, seemingly with no specific business purpose, but to evade compliance with regulatory laws.
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The committee’s accusations cut even deeper, alleging the exchange’s involvement in a fraudulent financial pyramid scheme, attributed to former serviceman Glaidson Acácio dos Santos.
The committee reinforced its stance with a proclamation from Binance Compliance Officer Samuel Lin, who stated, “We do not want [BINANCE].com to be regulated ever”, adding that the exchange’s lack of a definitive location of its headquarters is a calculated maneuver to sidestep regulatory obligations.
The weight of these allegations are the latest pieces added to the complex regulatory puzzle surrounding Binance.
Binance’s Existing Regulatory Troubles
Regulatory pressures throughout the year have placed Binance in a tight spot. The exchange currently faces lawsuits from two of the United States top regulators, the Securities and Exchange Commissions (SEC), and the Commodities and Futures Trading Commission (CFTC) for alleged violations of securities regulations.
The exchange has had to fully suspend operations in regions including Russia, France, and Germany, as sanctions by financial authorities intensify worldwide.
Binance is also facing severe processing and withdrawal troubles, following the abrupt exit of banking partner Paysafe in September.
On the Flipside
- The allegations made by the Brazilian Congress Committee are merely recommendations for now. The decision to indict or not rests with the Brazilian police.
- Binance’s Hong Kong-based users were recently targeted in a phishing scam resulting in the loss of $450K in funds and assets.
- In April, the CFTC accused Binance of knowingly facilitating transactions for terrorist organizations.
Why this Matters
The Brazilian congresses’ allegations, coupled with Binance’s existing troubles around the globe paints a precarious picture for the exchange’s reputation. If indicted and found guilty, the consequences for the exchange and its leadership could be profound and ultimately impact investor confidence.
Read here for more details about Binance’s alleged involvement with terrorist organizations:
Israel Cracks Down on Binance Crypto Accounts Tied to Hamas
Read more on Binance’s ongoing troubles amid intensifying regulatory scrutiny:
Binance and CZ Hit with FTX Foul Play Accusations in Lawsuit
