Binance Allegedly Involved in Financial Crime? Authorities Take Action

According to a report by Brazilian newspaper Valor Econômico, the Public Prosecutor’s Office and Federal Police are investigating Binance, one of the world’s largest cryptocurrency exchanges, for alleged financial crimes. 

The investigation was initiated after the Brazilian Securities and Exchange Commission (CVM) informed the Attorney General’s Office that Binance may have violated a “stop order” by continuing to offer cryptocurrency derivatives.

Binance Struggles With Regulatory Compliance

According to a report by Valor Econômico newspaper, the Brazilian Securities and Exchange Commission has informed the prosecutor’s office that there are indications of Binance’s practice of crimes of public prosecution in an administrative proceeding against B Fintech Serviços de Tecnologia, a company whose partner is Binance founder Changpeng Zhao.

The CVM alleges that the exchange instructed users to change the website’s language to access the derivative platform Binance Futures, which could potentially violate Brazilian law. The regulatory agency has reportedly provided evidence through “prints” from Binance support screens to support its claims.

Per the report, Filipe Batich, a partner in the compliance area of Madrona Fialho Advogados, the existence of the CVM “stop order” shows that the person responsible for giving guidance to support customers of these options to circumvent restrictions placed by the CVM intended to commit the crime of irregular exercise of the activity in the labor market furniture value.

Therefore, from a criminal point of view, the broker would not respond, but the employee who gave the guidance would be responsible for the alleged violation.

The Public Prosecutor’s Office or the Federal Police will investigate these facts to determine if there was a crime and who is responsible. The police will reportedly look for the official who gave the order. If the person responsible is identified, they could face six months to two years in prison.

Binance’s Troubles in Brazil Persist Since 2020

According to the report, In 2020, the Brazilian Securities and Exchange Commission initiated administrative proceedings against Binance for offering cryptocurrency derivatives, which led to a “stop order” for the irregular offer.

The CVM alleged that Binance’s website had vast content in Portuguese, with information on cryptocurrency futures that could be operated with up to 125 times leverage after account opening in less than 30 seconds. The page also provided links to videos and reported the existence of company applications, with no restrictions mentioned for investors residing in Brazil.

In the administrative proceeding, the CVM determined a “stop order” for the exchange’s offer of future contracts, emphasizing that future contracts are securities regardless of the underlying assets, by the law of the South American country.

The “stop order” issued by the Brazilian Securities and Exchange Commission against Binance highlights the increasing regulatory oversight faced by the cryptocurrency industry and the importance for exchanges to comply with all applicable laws and regulations, not only in the US but also in countries like Brazil.

Featured image from Unsplash, chart from TradingView.com