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CFTC Says Access To US Customers Is a “Privilege” In Wake of Binance Case

The US Commodity Futures Trading Commission (CFTC) remains determined in its efforts to regulate and oversee crypto firms. Following the resolution of the case involving Binance, CFTC Commissioner Christy Goldsmith Romero emphasized that access to US customers is a privilege, not a right, declaring, “There are no pirate ships in US markets.”

Romero stated that the CFTC’s case against former Binance CEO Changpeng Zhao and the crypto exchange marked just the beginning. She affirmed the Commission’s commitment to aggressively pursuing crypto platforms operating in US markets that attempt to evade the CFTC’s customer protection regulations.

Recently, Zhao agreed to pay $50 million in fines after pleading guilty to violating money laundering rules. Binance, the crypto exchange he co-founded, received a $4.3 billion fine for noncompliance and money laundering offenses, marking the largest fine in crypto history.

The U.S. Commodity Futures Trading Commission (CFTC) is set to receive a portion of the settlement in the Binance case, as the exchange allowed U.S. customers to trade unregistered cryptocurrency derivatives. CFTC Commissioner Christy Goldsmith Romero emphasized that Binance was aware of its platform facilitating illegal activities by terrorist organizations like Hamas and darknet marketplaces such as Hydra.

Romero stated that, instead of halting criminal activity financing, Binance chose to turn a blind eye and even provided users with advice on circumventing the platform’s superficial controls. She underscored a strict approach with no tolerance for using Virtual Private Networks (VPNs) to mask internet addresses or bypass know-your-customer rules, emphasizing the tightening regulatory environment in the crypto space.

CFTC Commissioner Caroline D. Pham emphasized the agency’s commitment to pursuing non-U.S. entities, stating that the CFTC’s jurisdiction knows no borders. She highlighted two significant legal precedents set by the case against Binance: the first alleged charge of evasion under CFTC Rule 1.6(a) for activities outside the United States related to swaps, and the first alleged charges for individual liability against a chief compliance officer.

Pham’s statement underscores the determination of regulatory agencies like the CFTC and the Securities and Exchange Commission (SEC) to intensify efforts against crypto firms engaged in illegal activities. The SEC recently filed a lawsuit against the crypto exchange Kraken, and it is currently involved in ongoing legal disputes with Ripple, Coinbase, and Binance. This signals a heightened focus on regulatory oversight in the crypto space to address potential violations and ensure compliance with existing financial regulations.

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Cryptocurrency is essentially virtual money that operates in a decentralized manner, not through a bank but directly on multiple independent computers.

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