Home - Blockchain - Binance under US Probes Possibly For Insider Trading

David Agullo

September 19, 2021

Binance under US Probes Possibly For Insider Trading

US investigators are looking into possible insider trading and market manipulation at Binance, potentially adding additional heat to the cryptocurrency exchange that has come under regulatory scrutiny in several nations.

Authorities are investigating whether Binance or its employees benefitted from exploiting its clients. Financial regulators from the United Kingdom to Germany to Japan have issued warnings and imposed business restrictions on the company, citing concerns about the use of cryptocurrency for money laundering and consumer hazards.

The exchange, whose holding company is based in the Cayman Islands, has reduced its product offers and stated that it wishes to strengthen its regulatory relations.

Despite not being based in any one country, Binance operates a massive trading platform where regular people may buy and sell digital tokens worth tens of billions of dollars without the involvement of government officials. The exchange now has access to millions of transactions, and US investigators are looking into whether the company used that access to its advantage, such as trading on customer orders before they were executed.

Company under Compliance Hassles

Binance and its outspoken founder, Changpeng Zhao, also known as CZ, have struggled with compliance. An increasing number of countries have asked that the firm and its affiliates stop providing services within their borders, arguing that the company and its affiliates lack legal permits. The Justice Department and the Internal Revenue Service in the United States have initiated criminal investigations into whether Binance was used as a conduit for money laundering and tax evasion.

Increasing Risk of Illicit Activities

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Binance is far from the first cryptocurrency to attract negative attention from US authorities. The Treasury Department, the Federal Reserve, and the Securities and Exchange Commission have all expressed concern about the rapid growth of cryptocurrency, with agencies ranging from the Treasury Department to the Federal Reserve and the Securities and Exchange Commission increasingly concerned that the market is a hotbed of illicit activity and that firms are straying into traditional financial services without adequately protecting consumers.

What is the Take of the Binance Team on This?

“When it comes to Binance, there is a hyper-focus on regulation.” The employees believe and emphasized Binance’s rules to avoid insider trading and added that the company separates the unit that handles new token issuance from the rest of the exchange’s workforce as another safeguard against wrongdoing. Binance’s worldwide compliance staff and the advisory board had increased 500 percent in the past year, with plans to double their size by the end of 2021. 

Zhao, who is headquartered in Singapore, has previously stated that Binance has sophisticated surveillance mechanisms in place to keep US-based traders away from the exchange. He has stated numerous times that the company is committed to abiding by the laws of the countries in which it operates.

According to one of the people, the CFTC has recently queried potential witnesses about the location of Binance’s data servers. While the reason for the CFTC’s interest has not been revealed, it could be related to jurisdictional concerns and the agency’s ability to exert authority over Binance. Courts in the United States have already dismissed lawsuits against the firm because it has no offices or managers in the states.

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The case is not confirmed, it is just trials and probes that are playing just to act in the best interest of the people who are using the platforms to do huge transactions. It is important to regulate and keep the crypto trading platforms at check in order to safeguard the interest of the people.