Binance, which has been plagued of late by high-profile regulatory admonitions, is now under investigation over insider trading claims as well, according to a report today from Bloomberg.
The report, which cites anonymous sources with knowledge of the investigation, states that that Commodity Futures Trading Commission is involved. The CFTC views Bitcoin—traded in the millions on Binance—as a commodity that falls under its jurisdiction in cases of fraud or market manipulation. The CFTC also has regulatory purview over derivatives trading in the U.S. Such crypto trading products are offered on Binance’s global exchange but not on its U.S.-based affiliate.
Binance is already being probed by the CFTC, which has been looking into whether the world’s top exchange illegally allowed U.S. residents to use the service. The Department of Justice and Internal Revenue Service have also been looking into the firm’s activities, according to a May report.
Binance’s troubles extend well beyond U.S. borders. The UK Financial Conduct Authority kicked things off in June, issuing a consumer warning about Binance Markets Limited, which Binance had acquired and renamed in hopes that it would become a UK-only exchange.
Things worsened on the regulatory front in July when the Cayman Islands Monetary Authority said the company wasn’t authorized as a cryptocurrency exchange on the Caribbean paradise.
Binance, which is incorporated in the Cayman Islands, responded via a spokesperson: “Binance.com does not run a cryptocurrency exchange out of the Cayman Islands. We do however, have entities incorporated under the laws of the Cayman Islands, performing activities that are permitted by law and not related to operating crypto exchange trading activities.”
Other national financial regulators have targeted entities under the Binance Group umbrella, including Italy, Singapore, the Netherlands, and Japan.
This week, Binance CEO Changpeng “CZ” Zhao conceded that the company needs a “centralized entity to work well with regulators.” While that may help assuage concerns from agencies that take issue with the company’s unclear headquarters and operating structure, it likely won’t help the exchange fight insider trading claims.
In an emailed statement, a Binance spokesperson told Decrypt, “We have a zero-tolerance policy for insider trading.” It vowed to use its security team to “investigate and hold those accountable that have engaged in this type of behavior, immediate termination being [the] minimal repercussion.”
