Binance's Founder Changpeng Zhao Responds to the CFTC Complaint

On March 28th, Binance.com CEO and founder Changpeng Zhao (CZ) tweeted a response to the CFTC complaint. Two days earlier, the CFTC had charged him, three Binance entities, and Samuel Lim, Binance's former Chief Compliance Officer, with multiple violations of the Commodity Exchange Act (CEA) and the CFTC.

CZ found the complaint "unexpected and disappointing" because Binance had been working with the agency for more than two years.

He believed the complaint appeared to contain an incomplete recitation of facts and disagreed with the characterization of many of the issues in the allegations. Binance would only be able to give a full response in due time but responded to address a few key points.

In terms of compliance and U.S. blocking technology, the CEO believed that Binance uses the most comprehensive and effective system in the industry.

He said that Binance has developed best-in-class technology to ensure its compliance. As the first global (non-U.S.) exchange to implement a mandatory KYC program, it "block US users by nationality (KYC), IP (including commonly used VPN endpoints outside of the US), mobile carrier, device fingerprints, bank deposit and withdrawals, blockchain deposits and withdrawals, credit card bin numbers, and more."

The founder said that Binance has 16 licenses/registrations worldwide and counting. The company's compliance team has more than 750 employees, many of whom also have backgrounds working in law enforcement or regulatory agencies. The exchange has received over 55,000 law enforcement (LE) requests to date and has assisted U.S. authorities in freezing/ seizing approximately $285 million so far since 2022. He added, "We intend to continue to respect and collaborate with US and other regulators around the world."

In addition, CZ said that under no circumstances will the company trade or "manipulate" the market for profit. Since Binance's revenues are in crypto, it needs to convert these crypto from time to time to pay for fiat or other cryptocurrencies. Affiliates that provide liquidity for less liquid pairs are subject to special monitoring and do not make large profits.

The founder also shared information about his own Binance accounts: one for Binance card and another for his own crypto holdings.

Binance has a 90-day no-day-trading rule for employees, which prohibits the sale or purchase of coins for 90 days after buying or selling them. Employees are also prohibited from trading Futures.