KEY POINTS
- A Brazilian congressional committee accused Binance of offering and trading securities without prior approval
- The crypto exchange platform allegedly operated a financial institution without proper authorization
- Binance also committed a “crime against the national financial system,” according to the committee
While Binance has continued offering its services to its customers in the U.K., the crypto exchange platform, alongside its CEO Changpeng Zhao (CZ) and other executives, could be facing new troubles in Brazil over alleged fraudulent management.
Following its probe into Ponzi schemes related to cryptocurrency in the country, a Brazilian congressional committee has recommended the indictment of four senior leaders of Binance, including CZ.
A translation of its report, which is more than 500 pages and centers on pyramid schemes, says its goal is to “investigate indicators of sophisticated fraudulent operations in the management” of businesses involved with crypto.
Local news outlet Valor Economico reported that the committee had already sent the request to Brazil’s Federal Police, Federal Revenue and Federal Public Ministry to pursue investigations into companies, such as Binance.
Despite the committee’s recommendation, the decision on whether to proceed with actual indictments is now in the hands of the Brazilian police.
Based on the committee’s investigation, Zhao and three local Binance crypto executives committed fraudulent management by offering or trading securities without prior approval, operating a financial institution without proper authorization and committing a “crime against the national financial system.”
The same committee also requested Comissão de Valores Mobiliários (CVM), Brazil’s securities regulator, to conduct an investigation on the continued derivatives sales of Binance even after a stop order had been issued to the crypto exchange platform.
In August, Binance proposed to settle with the CVM by paying $396,000. However, the regulator rejected this proposal.
The exchange now faces more fines and penalties from Brazil’s regulator, according to Bloomberg.
Binance, the world’s largest crypto exchange platform by trading volume, said it had tried its best to work with the congressional committee of Brazil but failed.
“Binance has remained committed and collaborative with the commission seeking constructive debate on the industry’s challenges in the interest of users and benefit of society overall. We strongly reject the exposure of our users or employees with baseless accusations of bad practices and the attempts to make Binance a target,” the crypto exchange platform said in a statement sent via email.
“As a responsible industry leader, Binance remains committed to helping the industry grow sustainably and furthering its security, which includes close collaboration with law enforcement around the world and in Brazil to detect suspicious activities and fight cybercrimes and illicit activities. Binance has an industry-leading global compliance program and investigations team with hundreds of employees across the globe and continues actively collaborating with authorities worldwide to thwart bad actors and keep the ecosystem more secure,” it added.
