24 ms·

CFTC sues Binance and CEO Changpeng Zhao [pdf]

639 points by fabian2k 4y ago

BlueHillAvenue 4y ago
CFTC sues Binance The Commodity Futures Trade Committee has brought a civil action suit to Binance, Changpeng Zhao, and the CCO Samuel Lim. The lawsuit is because Binance ,as an organization, has been actively soliciting and profiting off the United States customer base without complying with United States securities compliances. I saw this coming after the accidental investigation of Sam Bankman-Fried, and after Shou Zi Chew couldn’t take the heat in congress for Tik Tok. It’s a nice cocktail of the two ventures, but this still looks the same. As a recent graduate starting my entrepreneurial endeavors, it almost seems necessary to clash with authorities or at least impossible to avoid them. A key to successful business I have watched thus far is positive momentum. In large part, that comes from your sales team andthe biggest salesmen of them all, your CEO. But momentum on a plane you are engineering in the sky, does not seem like the smartest thing to do. But I know that is the trend and the basic blueprint of a money-making start-up. The companies that shoot up to our watchlist, the companies that have their tickers’ trending on Twitter. Those companies started like how Bernie Madoff started and were forced to comply afterward. Mark Zuckerberg is inspirational in his early rise to the top of tech. From hacking his father’s computer to the Harvard University Campus databases, Mark only acted and thought about it when he got called to the office. Bill Gates is the perfect example, and it’s perfectly hidden from most of the public. Did you know Bill Gates “stole” the idea of a graphical user interface that would become Windows? It is not legally enforceable because the Xerox Research Facility basically gave their ideas away by not protecting them. Steve Jobs was there as well, I’m sure. They sold those ideas and made it their own. But this is not a slight to those legends who took the American Dream to heart (except Madoff). This is the recognition of the role of the CEO, in my eyes, the person in the company who can sell the mission without anyone seeing it, the person selling someone on a dream with their eyes open, facing reality. Is that wrong? Yes, that is wrong. Patience is a virtue. Planning and being ten steps ahead of your counterparts in reality is smart. Selling someone with truth is groundbreaking. Changpeng Zhao made the common mistake these commercial CEOs make, which is the lack of planning ahead. I’m sure Zhao knew he would want United States consumers to have Binance accounts. That means you plan with United States Compliance right after mastering technology. According to Samuel Lim, Zhao’s priority for commercial success over U.S. compliance was a “biz-decision” this makes sense when the mantra is “you need money to make money,”. I aim to be a CEO in my own way, but I don’t expect it anytime soon. You can plan it first. Put it in God’s hands. - Real
rinze 4y ago
This is good for Bitcoin.
- incrudible 4y ago
  It might be good for DeFi, which has derivatives trading too, at this point.
  - sdfghswe 4y ago
    Wait, I thought bitcoin was decentralized?
    - SSLy 4y ago
      BTC is just wallets, DeFi here refers to more complicated instruments.
      - sdfghswe 4y ago
        Sorry, I thought DeFi stood for decentralized finance? Why can't we put "more complicated instruments" into wallets? Why is a bitcoin future different than a bitcoin, for these purposes?
        henry2023 4y ago
        You can. https://www.ribbon.finance/ https://www.ribbon.finance/
        aftbit 4y ago
        You certainly can. DeFi typically refers to smart contract protocols for lending, borrowing, swapping, pooling, etc. DAOs also fit under the label. These are usually on the Ethereum chain because its smart contracts are considerably more powerful than Bitcoin's.
  - joyfylbanana 4y ago
    The so-called DeFi is full of centralized choke points, such as stablecoins and other centrally issued securities
deleted 4y ago
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fabian2k 4y ago
There is more commentary by Molly White on Twitter, quoting various parts of the complaint: https://twitter.com/web3isgreat/status/1640373566322491393 https://twitter.com/web3isgreat/status/1640373566322491393 My favorite is probably the VIP feature "prompt notification of any law enforcement inquiry concerning their account". And of course there are all the text messages indicating they knew all the things they did were illegal.
- deleted 4y ago
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- bitL 4y ago
  Why is that one illegal? Didn't Google notify its users if their accounts were under legal review as well?
  - wmf 4y ago
    It depends. Often law enforcement investigations come with gag orders so the service provider cannot tell the customer they are under investigation.
    - seydor 4y ago
      People are forgetting that Binance is not a US company nor a bank
      - mikeyouse 4y ago
        Contrary to their preferences, when 12% of your trading volume comes from a Chicago-based trader, you are square in the realm of "governed by applicable US laws".
        psychlops 4y ago
        That's probably Binance.US.
seydor 4y ago
> according to Binance’s own documents for the month of August 2020 the platform earned $63 million in fees from derivatives transactions and approximately 16% of its accounts were held by customers Binance identified as being located in the United States. hm. 16% of users make $63M in a month? In any case CZ can dispense this unprofitable 16% and move somewhere in russia or intl waters now. Assuming that canada and EU break all ties with him Attacking the onramps to crypto in the middle of a bank crisis is not giving out the best of vibes (Thanks for the flagging but i m not debating this either way; i know HN is anticrypto)
- overthrow 4y ago
  I think you read that wrong. $63M makes up 100%, not 16%. It's clearer here (and also the numbers went way up between 2020 and 2021): https://techcrunch.com/2023/03/27/binance-and-ceo-changpeng-zhao-sued-by-cftc-over-trading-and-derivative-violations/ https://techcrunch.com/2023/03/27/binance-and-ceo-changpeng-... > In May 2021, Binance’s monthly revenue earned $1.14 billion from derivatives transactions, up from $63 million in August 2020, the CFTC noted. Of that amount, about 16% of Binance’s accounts were held by U.S. customers.
  - seydor 4y ago
    OK so the US is going after them for ~120M (for 2020) , when their profits were ~20B? In any case this is contrary to the main accusation that "Much of Binance’s reported trading volume, and its profitability, has come from its extensive solicitation of and access to customers located in the United States" AFAIK throughout the years they were publicly sending users to binance.us and did not encourage breaking the rule. Didn't seem like "Extensive solicitation"
    - SpicyLemonZest 4y ago
      One of the allegations in the complaint is that they did indeed encourage breaking the rule, walking high-value customers through the process of falsifying their location. For example, the CFTC has an alleged quote: > VIP team member: Hi CZ . . . I went through list of affected API clients, it includes a number of large strategic accounts including [a Chicago-headquartered trading firm] who is currently is a top 5 client and 12% of our volume > Zhao: Give them a heads up to ensure they don’t connect from a us Ip. Don’t leave anything in writing. They have non us entities. Let’s also make sure we don’t hit the biggest market makers with that email first. Do you have signal?
realworldperson 4y ago
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pffft8888 4y ago
The message with the FBI coordinating with social media platforms to censor Americans and now gov agencies going after Coinbase (the company that has tried hard to stick to the letter of the law, which is a valid position in a capitalist country) tells me that we are entering a phase where the gov is simply going mad with power. Down vote all you want I don't care (or I care more about sharing my observation than your disapproval.)
- chatmasta 4y ago
  FedNow is launching in July. I think the motivations here are pretty obvious.
  - xfour 4y ago
    Is this confirmed that it's really launching in July, do you have a source?
    - chatmasta 4y ago
      https://www.federalreserve.gov/newsevents/pressreleases/other20230315a.htm https://www.federalreserve.gov/newsevents/pressreleases/othe...
  - localplume 4y ago
    [dead]
- 2OEH8eoCRo0 4y ago
  > Coinbase (the company that has tried hard to stick to the letter of the law Where is their HQ?
  - seydor 4y ago
    Is Remote unlawful?
    - deleted 4y ago
MuffinFlavored 4y ago
Given the headline, you'd think Bitcoin would maybe be bothered, right? Wrong? Bitcoin started the year at $16.6k USD and is currently $26.9k USD (a return of 62% year to date). Why? Who/what is dumping money into Bitcoin that would cause this much demand? Can the rise in price be attributed to demand? I don't see how it couldn't be. How many millions of USD have been converted into "buy and hold" long term BTC investments? Is that the main driving force for this increase in price? It has to be a very sizable amount for BTC to be outperforming every other asset class... right? There's no way the price is artificially up 60%+? How could it stay propped up? I've seen it mentioned many times before that crypto can possibly be manipulated by whales or "smoke and mirrors" if you will. Coinmarketcap.com says Bitcoin volume in 24 hours is roughly 615,000 BTC ($16b, 3% of the total circulating supply) Is there more money going into BTC (inflow) than SPY/VOO/VTI/IVV/QQQ/mutual funds? I wouldn't imagine so. Why is the money that is making it into BTC (is the average middle American dollar cost averaging a portion of their paycheck bi-weekly into BTC through Coinbase?) able to increase BTC 60% YTD but a more sizable portion of money (because we can assume the stock market is much much larger of an investment vehicle) going into SPY/VOO/VTI/IVV/QQQ/mutual funds leads to a lesser return (SPY is up 3.95% YTD with like 1/4th of a 1.6%/year dividend in the process of being paid out so far, so call it 3.95% + (1.6%/4 quarters=0.40% quarterly dividend, Q1 just being paid out) = 4.35% return
- NotYourLawyer 4y ago
  It’s the tether lending machine.
  - gruez 4y ago
    It wasn't operating last year when bitcoin was crashing?
    - MuffinFlavored 4y ago
      Why/how was Bitcoin able to recover from its last crash? I get that "sentiment changed". But... who? Who was "afraid" of Bitcoin when sam bankman-fried got arrested/FTX collapsed, sold their coins, waited, saw everything get better, bought back in? Based on the price action, we'd have to assume a LOT of people have done that. Like, enough for it to shoot fall 21k -> 15k on the FTX news, then 15k -> back up to 26k. I just don't get it. Who is dollar cost averaging into Bitcoin with their fiat (USD, EUR, GBP, JPY, whatever it is) every paycheck? Millions of people? Where's the proof, other than the fact that "the price is up"?
deleted 4y ago
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ragnot 4y ago
It's hard not to see patterns emerging honestly. TikTok ban, Coinbase and now this. Seems like the US Gov is ramping up not only attacks on Chinese proxies but anything that might threaten US dollar reserve status. Should be interesting times.
- psychlops 4y ago
  If they need to work so hard to keep people in the system, it should be a good indicator of the state of affairs.
- JumpCrisscross 4y ago
  > TikTok ban, Coinbase and now this How is TikTok related to dollar hegemony?
  - humanizersequel 4y ago
    >Chinese proxies
    - JumpCrisscross 4y ago
      How does one separate attacks on dollar hegemony from broad American interests? I'm struggling to think of what any country would do that couldn't be characterized as defending its currency.
      - ragnot 4y ago
        TikTok is a more conventional ban on a foreign security apparatus, it really has nothing to do with dollar hegemony. Attacks on crypto institutions is the US Govt defending dollar hegemony. I have no proof (obviously), but if you just look at the pieces together it's hard not to justify that this is a trend.
        JumpCrisscross 4y ago
        > if you just look at the pieces together it's hard not to justify that this is a trend You don't see anything else in the last 6 months that could have turned crypto into an enforcement priority?
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AnonMO 4y ago
Anyone that was against robinhood/citadel trading against their user base should support this. because trading platforms should not be allowed to trade against their users and binance has been doing it for a while and now we have proof. also they have evidence which something I didn’t expect unlike the SEC they seem well prepared.
- 0xDEF 4y ago
  Crypto trading platforms should also not get any of the benefits Coinbase is lobbying for right now.
bananapub 4y ago
it’ll be very very funny if this is what undoes tether and de facto destroys the cryptocurrency cartels
- danielvf 4y ago
  USDT is actually from "Bitfinex", not from "Binance".
  - cwp 4y ago
    It would still be funny, though.
pavlov 4y ago
A recurring notion in the crypto community was that CFTC is the good cop to SEC’s bad cop. If only all crypto were under CFTC’s purview, everything would be awesome. I don’t know how this kind of action affects that belief.
- deleted 4y ago
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- tempsy 4y ago
  that ended when half of the CFTC staff was utterly embarrassed by their public groveling of SBF
- KptMarchewa 4y ago
  Can you really read those messages and claim they are the "bad cop"?
  - jefftk 4y ago
    This is the CFTC, not SEC.
- JumpCrisscross 4y ago
  > notion in the crypto community was that CFTC is the good cop to SEC’s bad cop The SEC has an order of magnitude more employees than the CFTC [1][2]. Crypto favored the latter not because it was a good cop, but because it is a weaker one. [1] https://www.sec.gov/strategic-plan/about https://www.sec.gov/strategic-plan/about [2] https://www.eeoc.gov/federal-sector/commodity-futures-trading-commission-cftc-0 https://www.eeoc.gov/federal-sector/commodity-futures-tradin...
  - TheBlight 4y ago
    Then why is it the CFTC going after Binance and not the SEC?
    - JumpCrisscross 4y ago
karlzt 4y ago
Related 3 months ago: Binance caught commingling funds between US and international exchanges: https://news.ycombinator.com/item?id=34079629 https://news.ycombinator.com/item?id=34079629 Binance's books are a black box, filings show, as it tries to rally confidence: https://news.ycombinator.com/item?id=34055058 https://news.ycombinator.com/item?id=34055058
- janmo 4y ago
  Reading through the complaint and everything that came to light recently it is clear that Binance is operating in the exact same way FTX did.
  - deleted 4y ago
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  - deleted 4y ago
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  - nwah1 4y ago
    Some of the revelations indicate it may be much worse.
    - boeingUH60 4y ago
      Somehow, the houses of cards manage to stay intact. I wonder what will finally pierce through it.
pffft8888 4y ago
I got flagged in the other thread. It was because I said the gov is going mad with power. This is not about Binance. They are going after Coinbase, too. They are trying to severe the connections between tradFi and deFi. They are also trying to censor views they don't like on all social media. Isn't that a coincidence? And take out TikTok too while you're at it, so only place to speak out now is Twitter... and they scared everyone away from Twitter because they say Musk is an alt right nutjob. SMH. Crazy times.
- Aaronstotle 4y ago
  Maybe you were flagged because of how you presented your ideas. The CFTC is going after Binance for purposeful evasion of U.S. regularities. The SEC is taking action on Coinbase, this one is more confusing because Coinbase has been asking for guidance from the SEC and they have refused. TikTok is a national security risk, unrelated to these other two issues, if you've seen the conspiracy theories being peddled by Elon, he does present a lot of right-wing/alt-right positions.
  - pffft8888 4y ago
    [flagged]
  - xapata 4y ago
    > has been asking for guidance Coinbase has announced that they've asked for guidance. I find it equally plausible that the SEC hasn't decided the rules as that Coinbase asked for overly specific (or overly broad) guidance that they knew couldn't be given.
- timcavel 4y ago
  [dead]
- JumpCrisscross 4y ago
  > not about Binance. They are going after Coinbase, too. They are trying to severe the connections between tradFi and deFi...Isn't that a coincidence? No. It’s hard, politically, to go after something when it’s making people rich. These investigations have been ongoing, some for years. FTX and Silvergate changed the calculus of watching, waiting and collecting versus pressing charges.
counter_factual 4y ago
The CFTC woke up and chose war. The question is why now? This action could have taken place in 2021 too. A hypothesis. Big tech loved crypto for the same reason they overpaid armies of engineers to do nothing: it prevented them from creating competing AI companies.
- jjtheblunt 4y ago
  > why now? Is it possibly correlated that FTX and SBF donated boatloads to Democrats with full media coverage, and donated to Republicans supposedly covertly, which turned out embarrassing in the pissed off public opinion, so now the politicians who were on the take need to look like they're not complicit?
joyfylbanana 4y ago
I wonder how much CFTC employees were placing those crypto futures and options before the announcement.
- AnonMO 4y ago
  If they did by options they lost all their money due to the greeks not enough volatility, and if they bought futures unless it was 100x or the had many tens of millions they also didn’t make money. Crypto moves like this every day +-~4%. Also there’s zero option platforms for US traders and if they traded futures its coinbase or kraken which are heavily regulated. Why take the risk?
  - earnesti 4y ago
    They could have opened an account at binance for sure
  - pakitan 4y ago
    You can't trade futures on Kraken if you're an US citizen. I suspect the same is true for Coinbase.
danielvf 4y ago
> ...“Like come on. They are here for crime.” Binance’s [money laundering reporting officer] agreed that “we see the bad, but we close 2 eyes.” [Edit: Used to link to the PDF from the CFTC in this comment, removed since hn story now goes to it. Thanks, dang!]
- treis 4y ago
  Seeing others be so wildly bad at their job makes me feel better about my performance at work.
- dang 4y ago
  Is there an online link that doesn't download? We can change the URL if so. Edit: changed from https://web3isgoinggreat.com/?id=cftc-sues-binance-and-ceo-changpeng-zhao https://web3isgoinggreat.com/?id=cftc-sues-binance-and-ceo-c... to the pdf linked there.
wnevets 4y ago
Crypto really is the gift that keeps on giving.
- polygamous_bat 4y ago
  The *grift.
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noisy_boy 4y ago
> Lim, Binance’s CCO from 2018 through 2022, is charged with willfully aiding and abetting Binance’s violations through intentional conduct that undermined Binance’s compliance program. Lim is also charged with conducting activities to willfully evade or attempt to evade applicable provisions of the CEA, including promoting the use of “creative means” to assist customers in circumventing Binance’s compliance controls and implementing a corporate policy that instructed Binance’s U.S. customers to access the trading facility through a virtual private network to avoid Binance’s IP address-based controls or create “new” accounts through off-shore shell companies to evade Binance’s KYC-based controls. Chief Compliance Officer promoting "creative means" of circumventing compliance controls. You just can't make this up.
- somenameforme 4y ago
  A good accountant will not only encourage, but directly facilitate and aid in tax avoidance. Tax evasion is what is illegal - that's not paying taxes you owe. Tax avoidance is using every possible loophole, trick, and structure to minimize what you owe. Large corporations, for instance, often pay tax rates of near 0%, by using all sorts of "creative" structuring, classifications, and so on to try to avoid taxation. And that is all completely legal. The point of this is that "sounds dodgy" or "done only to avoid a legal obligation" and "is illegal" are two very different things. Which it is, is a question I think few are capable of giving an even remotely informed opinion on. It's a global company being sued by the one country in the world they don't [nominally] offer service to.
  - sam_goody 4y ago
    Once, while sitting with my accountant, I asked, in passing, the sum of two numbers ("how much is X and Y?"). Without looking up or pausing he responded "How much do you want it to be?"
  - robocat 4y ago
    In New Zealand, there are anti-avoidance provisions, so some avoidance is illegal. If you are engineering your finances in a contrived or artificial manner, purely for the purpose of reducing taxes, you might find your tax avoidance techniques are illegal. Take care in your own jurisdiction to get good tax advice, since perhaps “avoidance” is a grey area!!!
FreeTrade 4y ago
Didn't CZ recently bring down SBF. The same SBF who was defrauding cypto investors and handing out their money to democrat politicians. The same SBF who got kid gloves treatment from the democrat NYT? CZ is one of the better guys in crypto and this whole thing stinks.
- JumpCrisscross 4y ago
  > CZ recently bring down SBF Did he? FTX went to CZ for help. CZ looked at their notoriously-shit balance sheet and ran scared.
  - PaywallBuster 4y ago
    he was certainly a key player > SBF jokes CZ couldn't visit the US > CZ announces he will sell his full stake in FTT (a huge percent of the float) > Alameda was extremely leveraged _based on their FTT holdings_, once FTT started crashing they went under water on their leverage and started fire selling assets at a loss > some of those assets belonged to FTX custumers
    - FreeTrade 4y ago
      I wonder if some of the well connected beneficiaries of SBF's largesse were happy about this.
perfect_kiss 4y ago
from CFTC complaint (reading at https://www.cftc.gov/media/8351/%20enfbinancecomplaint032723/download https://www.cftc.gov/media/8351/%20enfbinancecomplaint032723...) > Certain digital assets, including BTC, ETH, LTC, and at least two fiat-backed stablecoins, tether (“USDT”) and the Binance USD (“BUSD”), as well as other virtual currencies as alleged herein, are “commodities,” as defined under Section 1a(9) of the Act, 7 U.S.C. § 1a(9). This is interesting, it appears ETH was named a commodity in some US federal legal document. Interesting to see how this will play out in court. Should this override SEC statements about ETH being a security ?
- deleted 4y ago
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- aftbit 4y ago
  IMO this is more a case of who you ask and what their current goal is. CFTC regulates commodities, so of course they will say things they want to regulate are commodities. OTOH SEC regulates securities, so they will say things are securities. See also the way any kind of fraud can become "securities fraud" if you have investors. Basically, if your business involves defrauding customers, that is likely going to negatively impact stock price when it comes out, and if you lied and told shareholders you were not defrauding customers, you are also defrauding shareholders thus securities fraud thus SEC jurisdiction.
sainttookmoon 4y ago
[flagged]
- 0xDEF 4y ago
  Someone probably send conventional SMS over the Signal app.
- jxf 4y ago
  No. If others have copies of the messages, that's not surprising at all. It's not an encryption problem if you give an incriminating secret to someone and then they tell the authorities.
sainttookmoon 4y ago
CFTC said that they got some deleted messages from a Signal app. Isn't this bigger news?
- JumpCrisscross 4y ago
  > CFTC said that they got some deleted messages from a Signal app. Isn't this bigger news? No. Informants, possibly even confederates.
- mikeyouse 4y ago
  Likely not -- the US Government wouldn't admit to an exploit of that magnitude in a CFTC filing so it was surely either a seized phone or a collaborating witness providing them chat logs.
- jxf 4y ago
  No. If others have copies of the messages, that's not surprising at all. It's not an encryption problem if you give an incriminating secret to someone and then they tell the authorities.
- cguess 4y ago
  Signal is encrypted in transit, only sorta at rest. If someone gets your device you're already in serious trouble. Disappearing messages is the best bet against it, but if someone takes screenshots or the app isn't opened after the time as elapsed and the SQLite database is extracted, you're out of luck.
  - deleted 4y ago
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- rvnx 4y ago
  There is a real technical possibility for Signal or Google to push an update to specific targets, but it's unlikely for this type of crimes (the technique better be kept for terrorism). Most likely a mole in the organisation.
  - 4y ago
janmo 4y ago
Even tho this is only civil and Binance is operating offshore, I would highly recommend every one (who hasn't done it already) to withdraw their coins and monies from the exchange. There is a chance that every one runs for the exit in the coming days and that Binance is not 100% backed.
- awestroke 4y ago
  So you're encouraging a panic run?
  - arbol 4y ago
    It's sensible advice. You shouldn't use exchanges to hold your crypto anyway
    - awestroke 4y ago
      Where else should I hold it? It's typically safer at an exchange with 2fa
      - arbol 4y ago
        If you're going to store in the cloud, there are plenty of secret storing companies that might be a better option than crypto exchanges, which are prone to hacks and shutdowns.
nabakin 4y ago
Oh I have a Binance story. Back when Binance was smaller, they had a system to let cryptocurrencies compete to join their platform. Every month or so, the cryptocurrency community which bought the most BNB was added to their platform. They presented it as a fair competition, saying the intention was to add the most popular cryptocurrencies through votes and only one BNB per user was allowed. When I discovered a cryptocurrency community was blatantly cheating the system, creating fake accounts, spending thousands of dollars in BNB funded by the creators of the cryptocurrency (in a public Discord server), I contacted Binance to get them disqualified or at least a warning, but despite mountains of evidence, Binance did nothing. It was just a scam to prop up BNB. From that point, I knew what kind of company Binance was and never trusted them with my money.
- rsyc 4y ago
  What exchange do you currently use?
  - nabakin 4y ago
    None. Hardware wallet. I haven't heard anything bad about Kraken and it's been around for awhile. Coinbase seems stable
- BillyTheKing 4y ago
  I mean.. yes - but have you ever worked in a 2-year old start-up/Fintech? Those companies aren't even remotely ready structurally for the traffic and volumes that they're handling (successful ones that is). I don't think it's so much a conscious decision against compliance as it is just one in favour of volumes, that's unfortunately a necessary decision to make for a 2-year old Fintech, but it usually comes back to bite them at some point in the future - question is just how devastating is that bite
  - steveBK123 4y ago
    Sure, yes, it is, on its face, much easier & cheaper to operate without proper compliance/legal/fraud departments. And yet..
belter 4y ago
A long, long time ago, there used to be this game, where you would try to come up with a Google query that would return zero results. Although everybody deserves their day in court, and these should be considered allegations until proven, the new game nowadays could be: Find a Crypto company with no allegations of illegal activities... "Web3 is Going Just Great" - https://web3isgoinggreat.com/?id=cftc-sues-binance-and-ceo-changpeng-zhao https://web3isgoinggreat.com/?id=cftc-sues-binance-and-ceo-c...
- https443 4y ago
  "Google wacking"
nova22033 4y ago
Ugh why didn't they release this yesterday or earlier today. Now we're going to have to wait an entire day for Matt Levine's take.
- abawany 4y ago
  just got his article for today - it has what you're looking for :) - can't underestimate Matt Levine, you know.
- Balgair 4y ago
  https://www.bloomberg.com/opinion/articles/2023-03-27/the-cftc-comes-for-binance https://www.bloomberg.com/opinion/articles/2023-03-27/the-cf...
pavlov 4y ago
Look at the comments in these threads. It’s always loaded with accusations of statist bootlickers and sheep brainwashed by American government tyranny and all the other rhetoric that could be equally well from Timothy McVeigh or 1960s Maoists or any other extremist group at either end of the political spectrum. Crypto is obviously about politics and always was. But is there even a technology angle left anymore? Bitcoin is frozen in amber and will never do anything more than it does now. Ethereum after the PoS transition is essentially a very slow distributed database owned by a special interest group. Other blockchains are variations of the same theme. Is it worth talking about crypto on HN at all? A total ban on crypto topics might be worth contemplating. Other purely political topics are similarly banned.
- deleted 4y ago
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- timmytokyo 4y ago
  Now that the shit is finally hitting the crypto fan, banning discussions of crypto on HN would be perverse.
FPrompt 4y ago
SEC & co are gonna pop all the bubbles in the coming months it seems.
- I_am_tiberius 4y ago
  Not sure if the US benefits from this in the long term.
steveBK123 4y ago
Gonna go out n a limb and say putting "don't leave anything in writing" instructions, in writing, is very dumb.
habosa 4y ago
I've said it before but: everyone knew this. In 2017 when the first monster crypto run happened it seemed like everyone's onboarding/KYC protocols were blocking new US users besides Binance. I had an account with them purely because they seemed to be willfully ignoring financial regulations (not that I was doing anything wrong, I was just impatient and wanted to buy some coins). Surprise! They were.
mattbrewsbytes 4y ago
I think its ironic that we're watching the fiery sunset on the previous gold rush tech craze just as we see the sunrise on the next one. This next one could very well be capable of pumping itself up across the internet.
- collaborative 4y ago
  The next one will likely end the internet as we know it
danielvf 4y ago
A line item under reasons that Binance falls under US jurisdiction. "Binance relies on the Google suite of products for information management and email services." That's got to make companies around the world feel more comfortable using it! Oh, and AWS too!
- rossdavidh 4y ago
  True that, but it does not appear to be the only (or even the most important) reason the CFTC is citing.
- MrDunham 4y ago
  I believe something similar was a major reason that a whole FIFA scandal was able to be taken down by US prosecutors. Despite many people never setting foot in the US a lot of them use the US banking system or some of the piping that is predominantly US-based to move money around… Meaning that the US can get involved. From what I can tell it's extremely difficult to do business without having anything you do touch something based in the US. IE if you do business nearly anywhere, Uncle Sam can (almost certainly) prosecute
  - capableweb 4y ago
    > From what I can tell it's extremely difficult to do business without having anything you do touch something based in the US. IE if you do business nearly anywhere, Uncle Sam can (almost certainly) prosecute If you're doing business in any way that touches people from the US (which certainly FIFA does, one way or another), then it's hard. But for the rest of us, it's not really that hard. Everything the US has, there is a alternative for that hasn't anything to do with the US, from banking to hosting to productivity tools.
    - MrDunham 4y ago
      Banking was the interesting one — the FIFA execs moved money and most bank wires (or ACH... I forget) end up going through the U.S. in one way or another if they're international.
ssalka 4y ago
I was told "funds are safu"
bmc7505 4y ago
Fun fact: CZ is an alumnus of McGill University! Before he became a cryptocurrency tycoon, he was working on an EdTech platform called Classroom 2000. [1, 2] Maybe if he had devoted as much energy to replacing PowerPoint as fiat, we would have better presentation technology today. [1]: https://www.mcgill.ca/engineering/files/engineering/cv.pdf#page=61 https://www.mcgill.ca/engineering/files/engineering/cv.pdf#p... [2]: https://www.cc.gatech.edu/fce/c2000/overview/ https://www.cc.gatech.edu/fce/c2000/overview/
- lvl102 4y ago
  Is McGill considered a good school? Never heard of it before.
  - gloryjulio 4y ago
    Yes, it's a pretty good uni in Quebec
  - HDThoreaun 4y ago
    Maybe the best school in Canada, certainly top 5.
    - misiti3780 4y ago
      waterloo is better.
      - speed_spread 4y ago
        For CS, absolutely. The McGill brand spanks Waterloo's for most other domains. Note I said "brand". What you do with your diploma has little to do with the university you graduated from.
        misiti3780 4y ago
        agreed.
  - 4y ago
bobobob420 4y ago
[flagged]
can16358p 4y ago
Don't know which is scarier... Binance ignoring potential crime on its platform, or a US entity having power over someone at the other side of the world. While I don't support the first point, second is way more scary IMO. We need to stop US ruling the world as if it's its own, seriously.
- choppaface 4y ago
  Binance.us and United States Binance users cause harm in US markets, so it’s a US problem. If the harm were tiny or really hard to fight, e.g. all the existing off-shore credit card fraud, ad spam fraud, robocalls etc then the response might be different. Here the threat is one well-defined entity.
  - can16358p 4y ago
    Well if they really want to block US persons from using Binance (which is against freedom btw) they can simply block access, watch out for bank transfers to/from within US etc. While there are always workarounds, if people want to use something, they should be allowed to use it (as long as it doesn't harm others of course, which doesn't in this case). In no way US should be able to do anything to CZ as long as he doesn't enter US soil, physically in person.
- code_runner 4y ago
  They operated in the US illegally right? Seems like they're the ones who screwed up here...
  - can16358p 4y ago
    Internet should be free and anyone willing to participate in a platform should be allowed. This is against freedom. Ironic for a country where owning and carrying a gun is a right.
- AnonMO 4y ago
  I mean no one is forcing him to show up to court. if he doesn’t come its a defacto win for the CFTC This will lead to stronger enforcement of US entities interactions with binance or he shows and settle and moves on. The Eu, China, etc… can do the same. Also as stated by cz as per the filing 20-30% of traffic comes from the US that enough grounds for action.
TacticalCoder 4y ago
How comes they're going after everybody but iFinex (Bitfinex/iFinex/tether/USDT)? Coinbase? Going after Coinbase but letting the gangsters that do both run Bitfinex and Tether roam free? SBF/FTX was a fraud and was iFinex's biggest customer. Billions of stolen customers money and investors funds ended directly in iFinex's stash. It's very likely the one that made lots of money when Alameda was losing it all is the iFinex gang. Why are they walking totally free, not getting sued? At this point I call monkey business.
- harold_b 4y ago
  [dead]
- sdfghswe 4y ago
  > How comes they're going after everybody but iFinex (Bitfinex/iFinex/tether/USDT)? From what I understand, the reason CFTC is involved is that bitcoin was ruled to be a commodity, and CFTC has authority over commodity derivatives. It's literally in the name. Tether on the other hand is what? Just a number. They don't have authority over betting on numbers.
  - loeg 4y ago
    Tether's day is coming.
    - evdubs 4y ago
      Yea. Tether should reach $80B in market cap sometime this week. Exciting!
- arcticbull 4y ago
  One at a time. They don't have the resources to hit everyone at the same time. Just like a cop on the freeway can't stop 10 speeding cars at once but can pick them off one at a time. The more shenanigans the longer it takes to prepare the case. Just keep your popcorn warm.
deleted 4y ago
[deleted]
kmod 4y ago
I said this when FTX collapsed: I think FTX at least made a token effort to be legitimate, and Binance does not. Binance just hadn't gotten caught yet -- I think they will end up being worse than FTX. In behavior at least; the crypto ecosystem has a very high tolerance for bad behavior, so they might not see the crisis of confidence that FTX did.
mikelovenotwar 4y ago
Beautiful idiocy. I can't wait for this scam to fail completely
asciii 4y ago
"Binance is so effective at obfuscating its location and the identities of its operating companies that it has even confused its own Chief Strategy Officer." Can't be too bad... "For example, in September 2022 he was quoted as saying that "Binance is a Canadian company." The Chief Strategy Officer's statement was quickly corrected by a Binance spokesperson, who clarified that Binance is an "international company." Oh boy...!
ijidak 4y ago
Was Zhao the one chiding SBF when his legal issues started?
I_am_tiberius 4y ago
This case is definitely politically motivated, especially considering many cases happening in the last two weeks. These cases also mainly involve the US. Even though there are probably crimes connected to these cases, you can find similar situations almost anywhere if you pay attention. That's no excuse but it's important for Americans to wake up and see that the government is trying to keep a broken financial system working.
- bioemerl 4y ago
  The banks are doing fine right now and there are no real signs of a mass departure into crypto. Sounds to me more like the SVB and FTX failures lit some fire under the regulators asses and they're now starting to crack down on the bad dealings they've been ignoring.
  - I_am_tiberius 4y ago
    >The banks are doing fine right now It doesn't matter what people do. What matters is, that banks can't give deposited money back to its customers. It's just a bad system if a bank run can crash the entire system. Without switching from QT to QE again and bailing out customers two weeks ago, America may look much worse today.
    - bioemerl 4y ago
      Banks can never give back all deposited money at a moments notice. That's normal. What matters is that assets outpace liabilities and you've got insurance on your deposits. Fed's doing its job. It'll be fine.
      - I_am_tiberius 4y ago
        You're viewing the world as if modern monetary theory is the only option. Banks can give back all deposited money to its customers! Instead of investing deposited money, they just need to keep it deposited and request a fee from customers for this service. Like banks did 100 years ago. The fractional reserve banking system is just very bad and causes financial crises such as this one.
from 4y ago
I've been scouring this 74 page document for a while and I cannot for the life of me find the victims of Binance's alleged conduct. Anyone want to help me out?
- 2OEH8eoCRo0 4y ago
  Fraud is ok as long as nobody has lost money yet? Laws don't matter until someone is harmed?
  - from 4y ago
    Ctrl-f for fraud reveals three matches that are not related to the charged conduct.
    - deleted 4y ago
      [deleted]
- hackerlight 4y ago
  Turning a blind eye to money laundering, therefore helping criminal and terrorist orgs which have victims. Also the gamification aspects they mention would have hurt a lot of people with gambling problems.
- KrakenEng 4y ago
  Every other exchange that played by the rules and missed out on becoming the #1 exchange. It is easy to win when you cheat.
paulpauper 4y ago
Yet again, crypto proves to be more trouble than it's worth and inferior to stocks. I will stick to a large cap diversified tech portfolio like QQQ. More upside and less volatility. Crypto has too many risks to make it worthwhile from an investment standpoint, imho.
- reducesuffering 4y ago
  Diversified as in 55% in 10 companies and 75% in tech and retail? Large cap sure...
  - loeg 4y ago
    Yeah, they do say "tech portfolio" but I wouldn't recommend outsized investment in tech vs like, VTI (Vanguard total market).
darawk 4y ago
If you want a serious analysis of why this is actually happening, and what's actually important in this document, read Matt Levine: https://archive.ph/NF8yN https://archive.ph/NF8yN > The CFTC’s complaint here gestures at traditional regulatory concerns like retail customer protection and cracking down on money laundering. But it is mostly about cutting off a big international crypto exchange from big sophisticated proprietary market-making firms in the US. I think the market expectation here was that if you are a big trading firm trading with your own money and your own algorithms, and you have enough lawyers and offshore shell entities, you can trade on any crypto exchange in the world from the comfort of your Chicago office: There might be a technical argument that it’s not allowed, but your lawyers are aggressive and sophisticated enough to get around that technicality, and anyway why would the CFTC care? But the CFTC does care, perhaps not because it wants to protect big US high-frequency trading firms from the risks of trading on Binance, but because Binance is the biggest crypto exchange and this is a lever to crack down it. And the CFTC also has lawyers who are sophisticated and not deterred by technicalities — here, for instance, the technicality that Trading Firm B’s account actually belonged to a Jersey company. This is the actual substance of the complaint. The "terrorist financing" and retail stuff is a smokescreen to seem worthy of the CFTC's attention. Nobody is being protected here. No significant terrorist financing is being stopped.
- deleted 4y ago
  [deleted]
- pavlov 4y ago
  > “No significant terrorist financing is being stopped.” How do you know? When Binance’s own Chief Compliance Officer was primarily in the business of helping customers avoid compliance, it doesn’t seem like they would know very much about what ultimately went down on the platform. The complaint quotes an internal email that read: “We close our eyes.” Binance was a major counterparty of Bitzlato, a crypto exchange that existed primarily for Russian money laundering: https://www.reuters.com/business/finance/binance-moved-346-mln-seized-crypto-exchange-bitzlato-data-show-2023-01-24/ https://www.reuters.com/business/finance/binance-moved-346-m... That’s probably the tip of the iceberg. The CFTC’s complaint naturally focuses on the stuff that’s easiest for them to prove. Getting evidence from hedge funds based in Chicago is obviously a lot easier for a civil agency that doesn’t have enormous resources.
danielodievich 4y ago
For those who speak russian, Meduza has a recent short story describing how crypto is used to move money in and out of Russia now in a replica. https://meduza.io/episodes/2023/03/17/rasskazyvaem-o-sheme-po-kotoroy-dazhe-v-razgar-voyny-i-nesmotrya-na-sanktsii-iz-rossii-v-evropu-vyvodyatsya-pochti-lyubye-dengi-i-nikto-ne-sprashivaet-chi-oni-i-otkuda https://meduza.io/episodes/2023/03/17/rasskazyvaem-o-sheme-p.... A reimplementation of Hawala system with cryptotokens. My crypto-friendly friend found this to be the only way to supply his parents with remittances out of Australia. As I told him, besides gambling, theft and paying for drugs, this is all it is good for.
- BLKNSLVR 4y ago
  Which, I think, is a pretty good use case.
  - pizzalife 4y ago
    From my point of view, there is nothing good about evading sanctions against russia. It's supposed to be painful, and ideally impossible, for Australians to send money to russians in russia.
    - eldenwrong 4y ago
      Why are russians punished for the sins of their government? Should americans get the same treatment then?
      - tristor 4y ago
        > Why are russians punished for the sins of their government? Because they are participating in this governance. Countries bear responsibility collectively for their actions. And yes, absolutely Americans should be held to the same standards.
        isubkhankulov 4y ago
        What about Venezuela? Should its citizens be punished for Maduro's actions?
garbagecoder 4y ago
Is you takin notes on a criminal fuckin conspiracy?
joshxyz 4y ago
Popcorn time!
alexnewman 4y ago
Crypto Exchanges are horrible . They act as brokers, custodian and exchanges all in one. The industry claims they need USA regulation but they don’t engage in a reasonable manner. I still think ftx was the worst but I will shed no tears if Binance goes down. While I’m ranting… it’s time for bft systems not based on blockchain. These systems are all: 1) poorly tested. Btc, the best of them would never be shipped at a top tech company with such bad docs/testing 2) barely available. The rpc end points for most of these chains are barely up at three 9s. 3) hardly distributed or censorship resistant . The idea that govt can’t stop these networks is laughable
deleted 4y ago
[deleted]
saurik 4y ago
It is illegal in California to have a casino. It is not, however, illegal for me to go out of my way to drive to Nevada to in turn go to a casino. In this case, neither the casino nor I are doing anything wrong. Now, maybe it could be illegal for me to gamble. Sometimes, this means it is then illegal for me to "jursdiction shop" by going on vacation somewhere specially with the purpose of doing something that would be illegal for me to do here. I think, as an example, it is illegal for me to be in any way involve in betting on some kind of animal fight. This is something that I understand is legal in some other countries. I can appreciate jurisdiction shopping to be illegal. But like, that's on me, right? If it is illegal for me to do something then I am the one at blame for doing whatever it is that was wrong. It isn't up to the random people in the other country to prevent me from doing the thing. I thereby am having a very hard time thinking the US should have international jurisdiction over the entire world of people to require a non-US company from allowing US users to even use its site, requiring ID checks. I admit: I like crypto. But I also hate both gambling and gamification. It is important to understand that the REASON I like crypto is because of stuff like this: I do not believe one country should have such global power. Either it should be illegal for the firms in New York to set up all the shell companies and the individual retail traders to use VPNs to do a thing that could be illegal for them to do even if they jurisdiction shop... ...which would mean that any and all enforcement should be directed at them, not Binance, who wasn't trying hard to prevent anyone from doing this but frankly is doing more than I think the US has any right to demand!... ...or it should be narrowly illegal for someone in the US fo provide a venue for doing it. Saying it is illegal for anyone anywhere in the world to allow people from the US to do something "for their own good" is inane. But so, I imagine a lot of people on this website are in at least some western country if not the US, and so it feels good to spread Western values everywhere; and hell: this website is also anti-crypto in general. But to give you another example: are you selling software online? If you do, you have to KYC all of the people you sell to and collect VAT so you can remit it to the correct European authorities in each country. There is sometimes a de minimus threshold, but the threshold isn't that high, it has been going down over time, and AFAIK some of the EU countries do not have any threshold. It isn't something you are supposed to ignore. There is also a "convenient" one-stop shop so you can have a single registration and remit all of your taxes in a single currency, as the alternative before they started moving in this direction was complete madness. But like, it isn't legal for you to be selling digital services and downloadable software with nothing but e-mail and PayPal: you need to be using IP addresses and billing addresses and then collecting/reporting. Maybe that example--where right now many of the people on this website are doing something illegal today and maybe should be contacting some accountants and some international lawyers to figure it out--is elucidating.
chrisfinazzo 4y ago
I'm just here to enjoy the fact that the complaint uses Western Name Order[1]. For some strange reason, AP and a bunch of other style guides use pinyin when dealing with Chinese subjects, which in this case is...just not correct. If you're writing in English, to an English speaking audience, anything other than Western Order is nonsense, because referring to someone you've never met by just their last name is really sketchy. [1]: https://en.wikipedia.org/wiki/Personal_name#Western_name_order https://en.wikipedia.org/wiki/Personal_name#Western_name_ord...
- powersnail 4y ago
  > because referring to someone you've never met by just their last name is really sketchy That's an interesting observation. Since you are talking about the order of names, do you mean "last name" as in surname or given name? Because the document does use surnames (which is what "last name" means in western order) to refer to people, apart from the first time when their full names are used. An either way, in what sense is that sketchy? I know that referring to people by their given name only is a sign of intimacy, but I don't associate either with sketchiness. Do you think it imply sketchiness in the speaker's relation to the spoken, or sketchiness with regard to the subject themself?
  - chrisfinazzo 4y ago
    > Since you are talking about the order of names, do you mean "last name" as in surname or given name? Exactly. For people you don't know well, 'getting formal' is never really going to steer you wrong. Many of the Romance languages (Spanish being one I know best, also because my brother's wife is originally from Panama) have the concept of a formal and informal pronoun "you". To an older person, I might say, "¿Como esta usted?" instead of "¿Como estas?" as a sign of respect or deference. For the record, I know precisely zilch about the rules in pinyin, and by coincidence didn't really grasp that "Standard Chinese"[1] is really an offshoot of Mandarin until a couple of years ago. Seeing "Crouching Tiger" in Mandarin somehow got me in the mindset that this was "old" Chinese to fit with the time period of the film. Not so much.
    - 4y ago
1vuio0pswjnm7 4y ago
Do docdroid.net URLs last longer than 60 days with no views. Do they get archived by IA. Here's text-only version of the complaint, at a permanent URL that gets archived at IA: https://www.courtlistener.com/docket/67092867/1/commodity-futures-trading-commission-v-zhao/ https://www.courtlistener.com/docket/67092867/1/commodity-fu...
kumarski 4y ago
The full force of the federal gov't is coming for CZ. I spoke with several people who work at various AGs and folks in DC. It seems they will come down hard on him for a variety of reasons and through a variety of methods.
1vuio0pswjnm7 4y ago
SBF + CZ = dumb and dumber All the smartest people are working on AI. At least until they are laid off. Desperation sets in. What next. Hype, hype, hype. Never give up.
sub7 4y ago
It's not over until $usdt falls - but Binance was basically a more competent FTX so this is a good development
ChocoluvH 4y ago
Damn. Time to HODL?

639 points by fabian2k 4y ago

CFTC sues Binance The Commodity Futures Trade Committee has brought a civil action suit to Binance, Changpeng Zhao, and the CCO Samuel Lim. The lawsuit is because Binance ,as an organization, has been actively soliciting and profiting off the United States customer base without complying with United States securities compliances. I saw this coming after the accidental investigation of Sam Bankman-Fried, and after Shou Zi Chew couldn’t take the heat in congress for Tik Tok. It’s a nice cocktail of the two ventures, but this still looks the same. As a recent graduate starting my entrepreneurial endeavors, it almost seems necessary to clash with authorities or at least impossible to avoid them. A key to successful business I have watched thus far is positive momentum. In large part, that comes from your sales team andthe biggest salesmen of them all, your CEO. But momentum on a plane you are engineering in the sky, does not seem like the smartest thing to do. But I know that is the trend and the basic blueprint of a money-making start-up. The companies that shoot up to our watchlist, the companies that have their tickers’ trending on Twitter. Those companies started like how Bernie Madoff started and were forced to comply afterward. Mark Zuckerberg is inspirational in his early rise to the top of tech. From hacking his father’s computer to the Harvard University Campus databases, Mark only acted and thought about it when he got called to the office. Bill Gates is the perfect example, and it’s perfectly hidden from most of the public. Did you know Bill Gates “stole” the idea of a graphical user interface that would become Windows? It is not legally enforceable because the Xerox Research Facility basically gave their ideas away by not protecting them. Steve Jobs was there as well, I’m sure. They sold those ideas and made it their own. But this is not a slight to those legends who took the American Dream to heart (except Madoff). This is the recognition of the role of the CEO, in my eyes, the person in the company who can sell the mission without anyone seeing it, the person selling someone on a dream with their eyes open, facing reality. Is that wrong? Yes, that is wrong. Patience is a virtue. Planning and being ten steps ahead of your counterparts in reality is smart. Selling someone with truth is groundbreaking. Changpeng Zhao made the common mistake these commercial CEOs make, which is the lack of planning ahead. I’m sure Zhao knew he would want United States consumers to have Binance accounts. That means you plan with United States Compliance right after mastering technology. According to Samuel Lim, Zhao’s priority for commercial success over U.S. compliance was a “biz-decision” this makes sense when the mantra is “you need money to make money,”. I aim to be a CEO in my own way, but I don’t expect it anytime soon. You can plan it first. Put it in God’s hands. - Real

rinze 4y ago

This is good for Bitcoin.

incrudible 4y ago
It might be good for DeFi, which has derivatives trading too, at this point.
- sdfghswe 4y ago
  Wait, I thought bitcoin was decentralized?
  - SSLy 4y ago
    BTC is just wallets, DeFi here refers to more complicated instruments.
    - sdfghswe 4y ago
      Sorry, I thought DeFi stood for decentralized finance? Why can't we put "more complicated instruments" into wallets? Why is a bitcoin future different than a bitcoin, for these purposes?
      - henry2023 4y ago
        You can. https://www.ribbon.finance/ https://www.ribbon.finance/
      - aftbit 4y ago
        You certainly can. DeFi typically refers to smart contract protocols for lending, borrowing, swapping, pooling, etc. DAOs also fit under the label. These are usually on the Ethereum chain because its smart contracts are considerably more powerful than Bitcoin's.
- joyfylbanana 4y ago
  The so-called DeFi is full of centralized choke points, such as stablecoins and other centrally issued securities

deleted 4y ago

[deleted]

fabian2k 4y ago

There is more commentary by Molly White on Twitter, quoting various parts of the complaint: https://twitter.com/web3isgreat/status/1640373566322491393 https://twitter.com/web3isgreat/status/1640373566322491393 My favorite is probably the VIP feature "prompt notification of any law enforcement inquiry concerning their account". And of course there are all the text messages indicating they knew all the things they did were illegal.

deleted 4y ago
[deleted]
bitL 4y ago
Why is that one illegal? Didn't Google notify its users if their accounts were under legal review as well?
- wmf 4y ago
  It depends. Often law enforcement investigations come with gag orders so the service provider cannot tell the customer they are under investigation.
  - seydor 4y ago
    People are forgetting that Binance is not a US company nor a bank
    - mikeyouse 4y ago
      Contrary to their preferences, when 12% of your trading volume comes from a Chicago-based trader, you are square in the realm of "governed by applicable US laws".
      - psychlops 4y ago
        That's probably Binance.US.

seydor 4y ago

> according to Binance’s own documents for the month of August 2020 the platform earned $63 million in fees from derivatives transactions and approximately 16% of its accounts were held by customers Binance identified as being located in the United States. hm. 16% of users make $63M in a month? In any case CZ can dispense this unprofitable 16% and move somewhere in russia or intl waters now. Assuming that canada and EU break all ties with him Attacking the onramps to crypto in the middle of a bank crisis is not giving out the best of vibes (Thanks for the flagging but i m not debating this either way; i know HN is anticrypto)

overthrow 4y ago
I think you read that wrong. $63M makes up 100%, not 16%. It's clearer here (and also the numbers went way up between 2020 and 2021): https://techcrunch.com/2023/03/27/binance-and-ceo-changpeng-zhao-sued-by-cftc-over-trading-and-derivative-violations/ https://techcrunch.com/2023/03/27/binance-and-ceo-changpeng-... > In May 2021, Binance’s monthly revenue earned $1.14 billion from derivatives transactions, up from $63 million in August 2020, the CFTC noted. Of that amount, about 16% of Binance’s accounts were held by U.S. customers.
- seydor 4y ago
  OK so the US is going after them for ~120M (for 2020) , when their profits were ~20B? In any case this is contrary to the main accusation that "Much of Binance’s reported trading volume, and its profitability, has come from its extensive solicitation of and access to customers located in the United States" AFAIK throughout the years they were publicly sending users to binance.us and did not encourage breaking the rule. Didn't seem like "Extensive solicitation"
  - SpicyLemonZest 4y ago
    One of the allegations in the complaint is that they did indeed encourage breaking the rule, walking high-value customers through the process of falsifying their location. For example, the CFTC has an alleged quote: > VIP team member: Hi CZ . . . I went through list of affected API clients, it includes a number of large strategic accounts including [a Chicago-headquartered trading firm] who is currently is a top 5 client and 12% of our volume > Zhao: Give them a heads up to ensure they don’t connect from a us Ip. Don’t leave anything in writing. They have non us entities. Let’s also make sure we don’t hit the biggest market makers with that email first. Do you have signal?

realworldperson 4y ago

[dead]

pffft8888 4y ago

The message with the FBI coordinating with social media platforms to censor Americans and now gov agencies going after Coinbase (the company that has tried hard to stick to the letter of the law, which is a valid position in a capitalist country) tells me that we are entering a phase where the gov is simply going mad with power. Down vote all you want I don't care (or I care more about sharing my observation than your disapproval.)

chatmasta 4y ago
FedNow is launching in July. I think the motivations here are pretty obvious.
- xfour 4y ago
  Is this confirmed that it's really launching in July, do you have a source?
  - chatmasta 4y ago
    https://www.federalreserve.gov/newsevents/pressreleases/other20230315a.htm https://www.federalreserve.gov/newsevents/pressreleases/othe...
- localplume 4y ago
  [dead]
2OEH8eoCRo0 4y ago
> Coinbase (the company that has tried hard to stick to the letter of the law Where is their HQ?
- seydor 4y ago
  Is Remote unlawful?
  - deleted 4y ago

MuffinFlavored 4y ago

Given the headline, you'd think Bitcoin would maybe be bothered, right? Wrong? Bitcoin started the year at $16.6k USD and is currently $26.9k USD (a return of 62% year to date). Why? Who/what is dumping money into Bitcoin that would cause this much demand? Can the rise in price be attributed to demand? I don't see how it couldn't be. How many millions of USD have been converted into "buy and hold" long term BTC investments? Is that the main driving force for this increase in price? It has to be a very sizable amount for BTC to be outperforming every other asset class... right? There's no way the price is artificially up 60%+? How could it stay propped up? I've seen it mentioned many times before that crypto can possibly be manipulated by whales or "smoke and mirrors" if you will. Coinmarketcap.com says Bitcoin volume in 24 hours is roughly 615,000 BTC ($16b, 3% of the total circulating supply) Is there more money going into BTC (inflow) than SPY/VOO/VTI/IVV/QQQ/mutual funds? I wouldn't imagine so. Why is the money that is making it into BTC (is the average middle American dollar cost averaging a portion of their paycheck bi-weekly into BTC through Coinbase?) able to increase BTC 60% YTD but a more sizable portion of money (because we can assume the stock market is much much larger of an investment vehicle) going into SPY/VOO/VTI/IVV/QQQ/mutual funds leads to a lesser return (SPY is up 3.95% YTD with like 1/4th of a 1.6%/year dividend in the process of being paid out so far, so call it 3.95% + (1.6%/4 quarters=0.40% quarterly dividend, Q1 just being paid out) = 4.35% return

NotYourLawyer 4y ago
It’s the tether lending machine.
- gruez 4y ago
  It wasn't operating last year when bitcoin was crashing?
  - MuffinFlavored 4y ago
    Why/how was Bitcoin able to recover from its last crash? I get that "sentiment changed". But... who? Who was "afraid" of Bitcoin when sam bankman-fried got arrested/FTX collapsed, sold their coins, waited, saw everything get better, bought back in? Based on the price action, we'd have to assume a LOT of people have done that. Like, enough for it to shoot fall 21k -> 15k on the FTX news, then 15k -> back up to 26k. I just don't get it. Who is dollar cost averaging into Bitcoin with their fiat (USD, EUR, GBP, JPY, whatever it is) every paycheck? Millions of people? Where's the proof, other than the fact that "the price is up"?

deleted 4y ago

[deleted]

ragnot 4y ago

It's hard not to see patterns emerging honestly. TikTok ban, Coinbase and now this. Seems like the US Gov is ramping up not only attacks on Chinese proxies but anything that might threaten US dollar reserve status. Should be interesting times.

psychlops 4y ago
If they need to work so hard to keep people in the system, it should be a good indicator of the state of affairs.
JumpCrisscross 4y ago
> TikTok ban, Coinbase and now this How is TikTok related to dollar hegemony?
- humanizersequel 4y ago
  >Chinese proxies
  - JumpCrisscross 4y ago
    How does one separate attacks on dollar hegemony from broad American interests? I'm struggling to think of what any country would do that couldn't be characterized as defending its currency.
    - ragnot 4y ago
      TikTok is a more conventional ban on a foreign security apparatus, it really has nothing to do with dollar hegemony. Attacks on crypto institutions is the US Govt defending dollar hegemony. I have no proof (obviously), but if you just look at the pieces together it's hard not to justify that this is a trend.
      - JumpCrisscross 4y ago
        > if you just look at the pieces together it's hard not to justify that this is a trend You don't see anything else in the last 6 months that could have turned crypto into an enforcement priority?

deleted 4y ago

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AnonMO 4y ago

Anyone that was against robinhood/citadel trading against their user base should support this. because trading platforms should not be allowed to trade against their users and binance has been doing it for a while and now we have proof. also they have evidence which something I didn’t expect unlike the SEC they seem well prepared.

0xDEF 4y ago
Crypto trading platforms should also not get any of the benefits Coinbase is lobbying for right now.

bananapub 4y ago

it’ll be very very funny if this is what undoes tether and de facto destroys the cryptocurrency cartels

danielvf 4y ago
USDT is actually from "Bitfinex", not from "Binance".
- cwp 4y ago
  It would still be funny, though.

pavlov 4y ago

A recurring notion in the crypto community was that CFTC is the good cop to SEC’s bad cop. If only all crypto were under CFTC’s purview, everything would be awesome. I don’t know how this kind of action affects that belief.

deleted 4y ago
[deleted]
tempsy 4y ago
that ended when half of the CFTC staff was utterly embarrassed by their public groveling of SBF
KptMarchewa 4y ago
Can you really read those messages and claim they are the "bad cop"?
- jefftk 4y ago
  This is the CFTC, not SEC.
JumpCrisscross 4y ago
> notion in the crypto community was that CFTC is the good cop to SEC’s bad cop The SEC has an order of magnitude more employees than the CFTC [1][2]. Crypto favored the latter not because it was a good cop, but because it is a weaker one. [1] https://www.sec.gov/strategic-plan/about https://www.sec.gov/strategic-plan/about [2] https://www.eeoc.gov/federal-sector/commodity-futures-trading-commission-cftc-0 https://www.eeoc.gov/federal-sector/commodity-futures-tradin...
- TheBlight 4y ago
  Then why is it the CFTC going after Binance and not the SEC?
  - JumpCrisscross 4y ago

karlzt 4y ago

Related 3 months ago: Binance caught commingling funds between US and international exchanges: https://news.ycombinator.com/item?id=34079629 https://news.ycombinator.com/item?id=34079629 Binance's books are a black box, filings show, as it tries to rally confidence: https://news.ycombinator.com/item?id=34055058 https://news.ycombinator.com/item?id=34055058

janmo 4y ago
Reading through the complaint and everything that came to light recently it is clear that Binance is operating in the exact same way FTX did.
- deleted 4y ago
  [deleted]
- deleted 4y ago
  [deleted]
- nwah1 4y ago
  Some of the revelations indicate it may be much worse.
  - boeingUH60 4y ago
    Somehow, the houses of cards manage to stay intact. I wonder what will finally pierce through it.

pffft8888 4y ago

I got flagged in the other thread. It was because I said the gov is going mad with power. This is not about Binance. They are going after Coinbase, too. They are trying to severe the connections between tradFi and deFi. They are also trying to censor views they don't like on all social media. Isn't that a coincidence? And take out TikTok too while you're at it, so only place to speak out now is Twitter... and they scared everyone away from Twitter because they say Musk is an alt right nutjob. SMH. Crazy times.

Aaronstotle 4y ago
Maybe you were flagged because of how you presented your ideas. The CFTC is going after Binance for purposeful evasion of U.S. regularities. The SEC is taking action on Coinbase, this one is more confusing because Coinbase has been asking for guidance from the SEC and they have refused. TikTok is a national security risk, unrelated to these other two issues, if you've seen the conspiracy theories being peddled by Elon, he does present a lot of right-wing/alt-right positions.
- pffft8888 4y ago
  [flagged]
- xapata 4y ago
  > has been asking for guidance Coinbase has announced that they've asked for guidance. I find it equally plausible that the SEC hasn't decided the rules as that Coinbase asked for overly specific (or overly broad) guidance that they knew couldn't be given.
timcavel 4y ago
[dead]
JumpCrisscross 4y ago
> not about Binance. They are going after Coinbase, too. They are trying to severe the connections between tradFi and deFi...Isn't that a coincidence? No. It’s hard, politically, to go after something when it’s making people rich. These investigations have been ongoing, some for years. FTX and Silvergate changed the calculus of watching, waiting and collecting versus pressing charges.

counter_factual 4y ago

The CFTC woke up and chose war. The question is why now? This action could have taken place in 2021 too. A hypothesis. Big tech loved crypto for the same reason they overpaid armies of engineers to do nothing: it prevented them from creating competing AI companies.

jjtheblunt 4y ago
> why now? Is it possibly correlated that FTX and SBF donated boatloads to Democrats with full media coverage, and donated to Republicans supposedly covertly, which turned out embarrassing in the pissed off public opinion, so now the politicians who were on the take need to look like they're not complicit?

joyfylbanana 4y ago

I wonder how much CFTC employees were placing those crypto futures and options before the announcement.

AnonMO 4y ago
If they did by options they lost all their money due to the greeks not enough volatility, and if they bought futures unless it was 100x or the had many tens of millions they also didn’t make money. Crypto moves like this every day +-~4%. Also there’s zero option platforms for US traders and if they traded futures its coinbase or kraken which are heavily regulated. Why take the risk?
- earnesti 4y ago
  They could have opened an account at binance for sure
- pakitan 4y ago
  You can't trade futures on Kraken if you're an US citizen. I suspect the same is true for Coinbase.

danielvf 4y ago

> ...“Like come on. They are here for crime.” Binance’s [money laundering reporting officer] agreed that “we see the bad, but we close 2 eyes.” [Edit: Used to link to the PDF from the CFTC in this comment, removed since hn story now goes to it. Thanks, dang!]

treis 4y ago
Seeing others be so wildly bad at their job makes me feel better about my performance at work.
dang 4y ago
Is there an online link that doesn't download? We can change the URL if so. Edit: changed from https://web3isgoinggreat.com/?id=cftc-sues-binance-and-ceo-changpeng-zhao https://web3isgoinggreat.com/?id=cftc-sues-binance-and-ceo-c... to the pdf linked there.

wnevets 4y ago

Crypto really is the gift that keeps on giving.

polygamous_bat 4y ago
The *grift.

deleted 4y ago

[deleted]

noisy_boy 4y ago

> Lim, Binance’s CCO from 2018 through 2022, is charged with willfully aiding and abetting Binance’s violations through intentional conduct that undermined Binance’s compliance program. Lim is also charged with conducting activities to willfully evade or attempt to evade applicable provisions of the CEA, including promoting the use of “creative means” to assist customers in circumventing Binance’s compliance controls and implementing a corporate policy that instructed Binance’s U.S. customers to access the trading facility through a virtual private network to avoid Binance’s IP address-based controls or create “new” accounts through off-shore shell companies to evade Binance’s KYC-based controls. Chief Compliance Officer promoting "creative means" of circumventing compliance controls. You just can't make this up.

somenameforme 4y ago
A good accountant will not only encourage, but directly facilitate and aid in tax avoidance. Tax evasion is what is illegal - that's not paying taxes you owe. Tax avoidance is using every possible loophole, trick, and structure to minimize what you owe. Large corporations, for instance, often pay tax rates of near 0%, by using all sorts of "creative" structuring, classifications, and so on to try to avoid taxation. And that is all completely legal. The point of this is that "sounds dodgy" or "done only to avoid a legal obligation" and "is illegal" are two very different things. Which it is, is a question I think few are capable of giving an even remotely informed opinion on. It's a global company being sued by the one country in the world they don't [nominally] offer service to.
- sam_goody 4y ago
  Once, while sitting with my accountant, I asked, in passing, the sum of two numbers ("how much is X and Y?"). Without looking up or pausing he responded "How much do you want it to be?"
- robocat 4y ago
  In New Zealand, there are anti-avoidance provisions, so some avoidance is illegal. If you are engineering your finances in a contrived or artificial manner, purely for the purpose of reducing taxes, you might find your tax avoidance techniques are illegal. Take care in your own jurisdiction to get good tax advice, since perhaps “avoidance” is a grey area!!!

FreeTrade 4y ago

Didn't CZ recently bring down SBF. The same SBF who was defrauding cypto investors and handing out their money to democrat politicians. The same SBF who got kid gloves treatment from the democrat NYT? CZ is one of the better guys in crypto and this whole thing stinks.

JumpCrisscross 4y ago
> CZ recently bring down SBF Did he? FTX went to CZ for help. CZ looked at their notoriously-shit balance sheet and ran scared.
- PaywallBuster 4y ago
  he was certainly a key player > SBF jokes CZ couldn't visit the US > CZ announces he will sell his full stake in FTT (a huge percent of the float) > Alameda was extremely leveraged _based on their FTT holdings_, once FTT started crashing they went under water on their leverage and started fire selling assets at a loss > some of those assets belonged to FTX custumers
  - FreeTrade 4y ago
    I wonder if some of the well connected beneficiaries of SBF's largesse were happy about this.

perfect_kiss 4y ago

from CFTC complaint (reading at https://www.cftc.gov/media/8351/%20enfbinancecomplaint032723/download https://www.cftc.gov/media/8351/%20enfbinancecomplaint032723...) > Certain digital assets, including BTC, ETH, LTC, and at least two fiat-backed stablecoins, tether (“USDT”) and the Binance USD (“BUSD”), as well as other virtual currencies as alleged herein, are “commodities,” as defined under Section 1a(9) of the Act, 7 U.S.C. § 1a(9). This is interesting, it appears ETH was named a commodity in some US federal legal document. Interesting to see how this will play out in court. Should this override SEC statements about ETH being a security ?

deleted 4y ago
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aftbit 4y ago
IMO this is more a case of who you ask and what their current goal is. CFTC regulates commodities, so of course they will say things they want to regulate are commodities. OTOH SEC regulates securities, so they will say things are securities. See also the way any kind of fraud can become "securities fraud" if you have investors. Basically, if your business involves defrauding customers, that is likely going to negatively impact stock price when it comes out, and if you lied and told shareholders you were not defrauding customers, you are also defrauding shareholders thus securities fraud thus SEC jurisdiction.

sainttookmoon 4y ago

[flagged]

0xDEF 4y ago
Someone probably send conventional SMS over the Signal app.
jxf 4y ago
No. If others have copies of the messages, that's not surprising at all. It's not an encryption problem if you give an incriminating secret to someone and then they tell the authorities.

sainttookmoon 4y ago

CFTC said that they got some deleted messages from a Signal app. Isn't this bigger news?

JumpCrisscross 4y ago
> CFTC said that they got some deleted messages from a Signal app. Isn't this bigger news? No. Informants, possibly even confederates.
mikeyouse 4y ago
Likely not -- the US Government wouldn't admit to an exploit of that magnitude in a CFTC filing so it was surely either a seized phone or a collaborating witness providing them chat logs.
jxf 4y ago
No. If others have copies of the messages, that's not surprising at all. It's not an encryption problem if you give an incriminating secret to someone and then they tell the authorities.
cguess 4y ago
Signal is encrypted in transit, only sorta at rest. If someone gets your device you're already in serious trouble. Disappearing messages is the best bet against it, but if someone takes screenshots or the app isn't opened after the time as elapsed and the SQLite database is extracted, you're out of luck.
- deleted 4y ago
  [deleted]
rvnx 4y ago
There is a real technical possibility for Signal or Google to push an update to specific targets, but it's unlikely for this type of crimes (the technique better be kept for terrorism). Most likely a mole in the organisation.
- 4y ago

janmo 4y ago

Even tho this is only civil and Binance is operating offshore, I would highly recommend every one (who hasn't done it already) to withdraw their coins and monies from the exchange. There is a chance that every one runs for the exit in the coming days and that Binance is not 100% backed.

awestroke 4y ago
So you're encouraging a panic run?
- arbol 4y ago
  It's sensible advice. You shouldn't use exchanges to hold your crypto anyway
  - awestroke 4y ago
    Where else should I hold it? It's typically safer at an exchange with 2fa
    - arbol 4y ago
      If you're going to store in the cloud, there are plenty of secret storing companies that might be a better option than crypto exchanges, which are prone to hacks and shutdowns.

nabakin 4y ago

Oh I have a Binance story. Back when Binance was smaller, they had a system to let cryptocurrencies compete to join their platform. Every month or so, the cryptocurrency community which bought the most BNB was added to their platform. They presented it as a fair competition, saying the intention was to add the most popular cryptocurrencies through votes and only one BNB per user was allowed. When I discovered a cryptocurrency community was blatantly cheating the system, creating fake accounts, spending thousands of dollars in BNB funded by the creators of the cryptocurrency (in a public Discord server), I contacted Binance to get them disqualified or at least a warning, but despite mountains of evidence, Binance did nothing. It was just a scam to prop up BNB. From that point, I knew what kind of company Binance was and never trusted them with my money.

rsyc 4y ago
What exchange do you currently use?
- nabakin 4y ago
  None. Hardware wallet. I haven't heard anything bad about Kraken and it's been around for awhile. Coinbase seems stable
BillyTheKing 4y ago
I mean.. yes - but have you ever worked in a 2-year old start-up/Fintech? Those companies aren't even remotely ready structurally for the traffic and volumes that they're handling (successful ones that is). I don't think it's so much a conscious decision against compliance as it is just one in favour of volumes, that's unfortunately a necessary decision to make for a 2-year old Fintech, but it usually comes back to bite them at some point in the future - question is just how devastating is that bite
- steveBK123 4y ago
  Sure, yes, it is, on its face, much easier & cheaper to operate without proper compliance/legal/fraud departments. And yet..

belter 4y ago

A long, long time ago, there used to be this game, where you would try to come up with a Google query that would return zero results. Although everybody deserves their day in court, and these should be considered allegations until proven, the new game nowadays could be: Find a Crypto company with no allegations of illegal activities... "Web3 is Going Just Great" - https://web3isgoinggreat.com/?id=cftc-sues-binance-and-ceo-changpeng-zhao https://web3isgoinggreat.com/?id=cftc-sues-binance-and-ceo-c...

https443 4y ago
"Google wacking"

nova22033 4y ago

Ugh why didn't they release this yesterday or earlier today. Now we're going to have to wait an entire day for Matt Levine's take.

abawany 4y ago
just got his article for today - it has what you're looking for :) - can't underestimate Matt Levine, you know.
Balgair 4y ago
https://www.bloomberg.com/opinion/articles/2023-03-27/the-cftc-comes-for-binance https://www.bloomberg.com/opinion/articles/2023-03-27/the-cf...

pavlov 4y ago

Look at the comments in these threads. It’s always loaded with accusations of statist bootlickers and sheep brainwashed by American government tyranny and all the other rhetoric that could be equally well from Timothy McVeigh or 1960s Maoists or any other extremist group at either end of the political spectrum. Crypto is obviously about politics and always was. But is there even a technology angle left anymore? Bitcoin is frozen in amber and will never do anything more than it does now. Ethereum after the PoS transition is essentially a very slow distributed database owned by a special interest group. Other blockchains are variations of the same theme. Is it worth talking about crypto on HN at all? A total ban on crypto topics might be worth contemplating. Other purely political topics are similarly banned.

deleted 4y ago
[deleted]
timmytokyo 4y ago
Now that the shit is finally hitting the crypto fan, banning discussions of crypto on HN would be perverse.

FPrompt 4y ago

SEC & co are gonna pop all the bubbles in the coming months it seems.

I_am_tiberius 4y ago
Not sure if the US benefits from this in the long term.

steveBK123 4y ago

Gonna go out n a limb and say putting "don't leave anything in writing" instructions, in writing, is very dumb.

habosa 4y ago

I've said it before but: everyone knew this. In 2017 when the first monster crypto run happened it seemed like everyone's onboarding/KYC protocols were blocking new US users besides Binance. I had an account with them purely because they seemed to be willfully ignoring financial regulations (not that I was doing anything wrong, I was just impatient and wanted to buy some coins). Surprise! They were.

mattbrewsbytes 4y ago

I think its ironic that we're watching the fiery sunset on the previous gold rush tech craze just as we see the sunrise on the next one. This next one could very well be capable of pumping itself up across the internet.

collaborative 4y ago
The next one will likely end the internet as we know it

danielvf 4y ago

A line item under reasons that Binance falls under US jurisdiction. "Binance relies on the Google suite of products for information management and email services." That's got to make companies around the world feel more comfortable using it! Oh, and AWS too!

rossdavidh 4y ago
True that, but it does not appear to be the only (or even the most important) reason the CFTC is citing.
MrDunham 4y ago
I believe something similar was a major reason that a whole FIFA scandal was able to be taken down by US prosecutors. Despite many people never setting foot in the US a lot of them use the US banking system or some of the piping that is predominantly US-based to move money around… Meaning that the US can get involved. From what I can tell it's extremely difficult to do business without having anything you do touch something based in the US. IE if you do business nearly anywhere, Uncle Sam can (almost certainly) prosecute
- capableweb 4y ago
  > From what I can tell it's extremely difficult to do business without having anything you do touch something based in the US. IE if you do business nearly anywhere, Uncle Sam can (almost certainly) prosecute If you're doing business in any way that touches people from the US (which certainly FIFA does, one way or another), then it's hard. But for the rest of us, it's not really that hard. Everything the US has, there is a alternative for that hasn't anything to do with the US, from banking to hosting to productivity tools.
  - MrDunham 4y ago
    Banking was the interesting one — the FIFA execs moved money and most bank wires (or ACH... I forget) end up going through the U.S. in one way or another if they're international.

ssalka 4y ago

I was told "funds are safu"

bmc7505 4y ago

Fun fact: CZ is an alumnus of McGill University! Before he became a cryptocurrency tycoon, he was working on an EdTech platform called Classroom 2000. [1, 2] Maybe if he had devoted as much energy to replacing PowerPoint as fiat, we would have better presentation technology today. [1]: https://www.mcgill.ca/engineering/files/engineering/cv.pdf#page=61 https://www.mcgill.ca/engineering/files/engineering/cv.pdf#p... [2]: https://www.cc.gatech.edu/fce/c2000/overview/ https://www.cc.gatech.edu/fce/c2000/overview/

lvl102 4y ago
Is McGill considered a good school? Never heard of it before.
- gloryjulio 4y ago
  Yes, it's a pretty good uni in Quebec
- HDThoreaun 4y ago
  Maybe the best school in Canada, certainly top 5.
  - misiti3780 4y ago
    waterloo is better.
    - speed_spread 4y ago
      For CS, absolutely. The McGill brand spanks Waterloo's for most other domains. Note I said "brand". What you do with your diploma has little to do with the university you graduated from.
      - misiti3780 4y ago
        agreed.
- 4y ago

bobobob420 4y ago

[flagged]

can16358p 4y ago

Don't know which is scarier... Binance ignoring potential crime on its platform, or a US entity having power over someone at the other side of the world. While I don't support the first point, second is way more scary IMO. We need to stop US ruling the world as if it's its own, seriously.

choppaface 4y ago
Binance.us and United States Binance users cause harm in US markets, so it’s a US problem. If the harm were tiny or really hard to fight, e.g. all the existing off-shore credit card fraud, ad spam fraud, robocalls etc then the response might be different. Here the threat is one well-defined entity.
- can16358p 4y ago
  Well if they really want to block US persons from using Binance (which is against freedom btw) they can simply block access, watch out for bank transfers to/from within US etc. While there are always workarounds, if people want to use something, they should be allowed to use it (as long as it doesn't harm others of course, which doesn't in this case). In no way US should be able to do anything to CZ as long as he doesn't enter US soil, physically in person.
code_runner 4y ago
They operated in the US illegally right? Seems like they're the ones who screwed up here...
- can16358p 4y ago
  Internet should be free and anyone willing to participate in a platform should be allowed. This is against freedom. Ironic for a country where owning and carrying a gun is a right.
AnonMO 4y ago
I mean no one is forcing him to show up to court. if he doesn’t come its a defacto win for the CFTC This will lead to stronger enforcement of US entities interactions with binance or he shows and settle and moves on. The Eu, China, etc… can do the same. Also as stated by cz as per the filing 20-30% of traffic comes from the US that enough grounds for action.

TacticalCoder 4y ago

How comes they're going after everybody but iFinex (Bitfinex/iFinex/tether/USDT)? Coinbase? Going after Coinbase but letting the gangsters that do both run Bitfinex and Tether roam free? SBF/FTX was a fraud and was iFinex's biggest customer. Billions of stolen customers money and investors funds ended directly in iFinex's stash. It's very likely the one that made lots of money when Alameda was losing it all is the iFinex gang. Why are they walking totally free, not getting sued? At this point I call monkey business.

harold_b 4y ago
[dead]
sdfghswe 4y ago
> How comes they're going after everybody but iFinex (Bitfinex/iFinex/tether/USDT)? From what I understand, the reason CFTC is involved is that bitcoin was ruled to be a commodity, and CFTC has authority over commodity derivatives. It's literally in the name. Tether on the other hand is what? Just a number. They don't have authority over betting on numbers.
- loeg 4y ago
  Tether's day is coming.
  - evdubs 4y ago
    Yea. Tether should reach $80B in market cap sometime this week. Exciting!
arcticbull 4y ago
One at a time. They don't have the resources to hit everyone at the same time. Just like a cop on the freeway can't stop 10 speeding cars at once but can pick them off one at a time. The more shenanigans the longer it takes to prepare the case. Just keep your popcorn warm.

deleted 4y ago

[deleted]

kmod 4y ago

I said this when FTX collapsed: I think FTX at least made a token effort to be legitimate, and Binance does not. Binance just hadn't gotten caught yet -- I think they will end up being worse than FTX. In behavior at least; the crypto ecosystem has a very high tolerance for bad behavior, so they might not see the crisis of confidence that FTX did.

mikelovenotwar 4y ago

Beautiful idiocy. I can't wait for this scam to fail completely

asciii 4y ago

"Binance is so effective at obfuscating its location and the identities of its operating companies that it has even confused its own Chief Strategy Officer." Can't be too bad... "For example, in September 2022 he was quoted as saying that "Binance is a Canadian company." The Chief Strategy Officer's statement was quickly corrected by a Binance spokesperson, who clarified that Binance is an "international company." Oh boy...!

ijidak 4y ago

Was Zhao the one chiding SBF when his legal issues started?

I_am_tiberius 4y ago

This case is definitely politically motivated, especially considering many cases happening in the last two weeks. These cases also mainly involve the US. Even though there are probably crimes connected to these cases, you can find similar situations almost anywhere if you pay attention. That's no excuse but it's important for Americans to wake up and see that the government is trying to keep a broken financial system working.

bioemerl 4y ago
The banks are doing fine right now and there are no real signs of a mass departure into crypto. Sounds to me more like the SVB and FTX failures lit some fire under the regulators asses and they're now starting to crack down on the bad dealings they've been ignoring.
- I_am_tiberius 4y ago
  >The banks are doing fine right now It doesn't matter what people do. What matters is, that banks can't give deposited money back to its customers. It's just a bad system if a bank run can crash the entire system. Without switching from QT to QE again and bailing out customers two weeks ago, America may look much worse today.
  - bioemerl 4y ago
    Banks can never give back all deposited money at a moments notice. That's normal. What matters is that assets outpace liabilities and you've got insurance on your deposits. Fed's doing its job. It'll be fine.
    - I_am_tiberius 4y ago
      You're viewing the world as if modern monetary theory is the only option. Banks can give back all deposited money to its customers! Instead of investing deposited money, they just need to keep it deposited and request a fee from customers for this service. Like banks did 100 years ago. The fractional reserve banking system is just very bad and causes financial crises such as this one.

from 4y ago

I've been scouring this 74 page document for a while and I cannot for the life of me find the victims of Binance's alleged conduct. Anyone want to help me out?

2OEH8eoCRo0 4y ago
Fraud is ok as long as nobody has lost money yet? Laws don't matter until someone is harmed?
- from 4y ago
  Ctrl-f for fraud reveals three matches that are not related to the charged conduct.
  - deleted 4y ago
    [deleted]
hackerlight 4y ago
Turning a blind eye to money laundering, therefore helping criminal and terrorist orgs which have victims. Also the gamification aspects they mention would have hurt a lot of people with gambling problems.
KrakenEng 4y ago
Every other exchange that played by the rules and missed out on becoming the #1 exchange. It is easy to win when you cheat.

paulpauper 4y ago

Yet again, crypto proves to be more trouble than it's worth and inferior to stocks. I will stick to a large cap diversified tech portfolio like QQQ. More upside and less volatility. Crypto has too many risks to make it worthwhile from an investment standpoint, imho.

reducesuffering 4y ago
Diversified as in 55% in 10 companies and 75% in tech and retail? Large cap sure...
- loeg 4y ago
  Yeah, they do say "tech portfolio" but I wouldn't recommend outsized investment in tech vs like, VTI (Vanguard total market).

darawk 4y ago

If you want a serious analysis of why this is actually happening, and what's actually important in this document, read Matt Levine: https://archive.ph/NF8yN https://archive.ph/NF8yN > The CFTC’s complaint here gestures at traditional regulatory concerns like retail customer protection and cracking down on money laundering. But it is mostly about cutting off a big international crypto exchange from big sophisticated proprietary market-making firms in the US. I think the market expectation here was that if you are a big trading firm trading with your own money and your own algorithms, and you have enough lawyers and offshore shell entities, you can trade on any crypto exchange in the world from the comfort of your Chicago office: There might be a technical argument that it’s not allowed, but your lawyers are aggressive and sophisticated enough to get around that technicality, and anyway why would the CFTC care? But the CFTC does care, perhaps not because it wants to protect big US high-frequency trading firms from the risks of trading on Binance, but because Binance is the biggest crypto exchange and this is a lever to crack down it. And the CFTC also has lawyers who are sophisticated and not deterred by technicalities — here, for instance, the technicality that Trading Firm B’s account actually belonged to a Jersey company. This is the actual substance of the complaint. The "terrorist financing" and retail stuff is a smokescreen to seem worthy of the CFTC's attention. Nobody is being protected here. No significant terrorist financing is being stopped.

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pavlov 4y ago
> “No significant terrorist financing is being stopped.” How do you know? When Binance’s own Chief Compliance Officer was primarily in the business of helping customers avoid compliance, it doesn’t seem like they would know very much about what ultimately went down on the platform. The complaint quotes an internal email that read: “We close our eyes.” Binance was a major counterparty of Bitzlato, a crypto exchange that existed primarily for Russian money laundering: https://www.reuters.com/business/finance/binance-moved-346-mln-seized-crypto-exchange-bitzlato-data-show-2023-01-24/ https://www.reuters.com/business/finance/binance-moved-346-m... That’s probably the tip of the iceberg. The CFTC’s complaint naturally focuses on the stuff that’s easiest for them to prove. Getting evidence from hedge funds based in Chicago is obviously a lot easier for a civil agency that doesn’t have enormous resources.

danielodievich 4y ago

For those who speak russian, Meduza has a recent short story describing how crypto is used to move money in and out of Russia now in a replica. https://meduza.io/episodes/2023/03/17/rasskazyvaem-o-sheme-po-kotoroy-dazhe-v-razgar-voyny-i-nesmotrya-na-sanktsii-iz-rossii-v-evropu-vyvodyatsya-pochti-lyubye-dengi-i-nikto-ne-sprashivaet-chi-oni-i-otkuda https://meduza.io/episodes/2023/03/17/rasskazyvaem-o-sheme-p.... A reimplementation of Hawala system with cryptotokens. My crypto-friendly friend found this to be the only way to supply his parents with remittances out of Australia. As I told him, besides gambling, theft and paying for drugs, this is all it is good for.

BLKNSLVR 4y ago
Which, I think, is a pretty good use case.
- pizzalife 4y ago
  From my point of view, there is nothing good about evading sanctions against russia. It's supposed to be painful, and ideally impossible, for Australians to send money to russians in russia.
  - eldenwrong 4y ago
    Why are russians punished for the sins of their government? Should americans get the same treatment then?
    - tristor 4y ago
      > Why are russians punished for the sins of their government? Because they are participating in this governance. Countries bear responsibility collectively for their actions. And yes, absolutely Americans should be held to the same standards.
      - isubkhankulov 4y ago
        What about Venezuela? Should its citizens be punished for Maduro's actions?

garbagecoder 4y ago

Is you takin notes on a criminal fuckin conspiracy?

joshxyz 4y ago

Popcorn time!

alexnewman 4y ago

Crypto Exchanges are horrible . They act as brokers, custodian and exchanges all in one. The industry claims they need USA regulation but they don’t engage in a reasonable manner. I still think ftx was the worst but I will shed no tears if Binance goes down. While I’m ranting… it’s time for bft systems not based on blockchain. These systems are all: 1) poorly tested. Btc, the best of them would never be shipped at a top tech company with such bad docs/testing 2) barely available. The rpc end points for most of these chains are barely up at three 9s. 3) hardly distributed or censorship resistant . The idea that govt can’t stop these networks is laughable

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saurik 4y ago

It is illegal in California to have a casino. It is not, however, illegal for me to go out of my way to drive to Nevada to in turn go to a casino. In this case, neither the casino nor I are doing anything wrong. Now, maybe it could be illegal for me to gamble. Sometimes, this means it is then illegal for me to "jursdiction shop" by going on vacation somewhere specially with the purpose of doing something that would be illegal for me to do here. I think, as an example, it is illegal for me to be in any way involve in betting on some kind of animal fight. This is something that I understand is legal in some other countries. I can appreciate jurisdiction shopping to be illegal. But like, that's on me, right? If it is illegal for me to do something then I am the one at blame for doing whatever it is that was wrong. It isn't up to the random people in the other country to prevent me from doing the thing. I thereby am having a very hard time thinking the US should have international jurisdiction over the entire world of people to require a non-US company from allowing US users to even use its site, requiring ID checks. I admit: I like crypto. But I also hate both gambling and gamification. It is important to understand that the REASON I like crypto is because of stuff like this: I do not believe one country should have such global power. Either it should be illegal for the firms in New York to set up all the shell companies and the individual retail traders to use VPNs to do a thing that could be illegal for them to do even if they jurisdiction shop... ...which would mean that any and all enforcement should be directed at them, not Binance, who wasn't trying hard to prevent anyone from doing this but frankly is doing more than I think the US has any right to demand!... ...or it should be narrowly illegal for someone in the US fo provide a venue for doing it. Saying it is illegal for anyone anywhere in the world to allow people from the US to do something "for their own good" is inane. But so, I imagine a lot of people on this website are in at least some western country if not the US, and so it feels good to spread Western values everywhere; and hell: this website is also anti-crypto in general. But to give you another example: are you selling software online? If you do, you have to KYC all of the people you sell to and collect VAT so you can remit it to the correct European authorities in each country. There is sometimes a de minimus threshold, but the threshold isn't that high, it has been going down over time, and AFAIK some of the EU countries do not have any threshold. It isn't something you are supposed to ignore. There is also a "convenient" one-stop shop so you can have a single registration and remit all of your taxes in a single currency, as the alternative before they started moving in this direction was complete madness. But like, it isn't legal for you to be selling digital services and downloadable software with nothing but e-mail and PayPal: you need to be using IP addresses and billing addresses and then collecting/reporting. Maybe that example--where right now many of the people on this website are doing something illegal today and maybe should be contacting some accountants and some international lawyers to figure it out--is elucidating.

chrisfinazzo 4y ago

I'm just here to enjoy the fact that the complaint uses Western Name Order[1]. For some strange reason, AP and a bunch of other style guides use pinyin when dealing with Chinese subjects, which in this case is...just not correct. If you're writing in English, to an English speaking audience, anything other than Western Order is nonsense, because referring to someone you've never met by just their last name is really sketchy. [1]: https://en.wikipedia.org/wiki/Personal_name#Western_name_order https://en.wikipedia.org/wiki/Personal_name#Western_name_ord...

powersnail 4y ago
> because referring to someone you've never met by just their last name is really sketchy That's an interesting observation. Since you are talking about the order of names, do you mean "last name" as in surname or given name? Because the document does use surnames (which is what "last name" means in western order) to refer to people, apart from the first time when their full names are used. An either way, in what sense is that sketchy? I know that referring to people by their given name only is a sign of intimacy, but I don't associate either with sketchiness. Do you think it imply sketchiness in the speaker's relation to the spoken, or sketchiness with regard to the subject themself?
- chrisfinazzo 4y ago
  > Since you are talking about the order of names, do you mean "last name" as in surname or given name? Exactly. For people you don't know well, 'getting formal' is never really going to steer you wrong. Many of the Romance languages (Spanish being one I know best, also because my brother's wife is originally from Panama) have the concept of a formal and informal pronoun "you". To an older person, I might say, "¿Como esta usted?" instead of "¿Como estas?" as a sign of respect or deference. For the record, I know precisely zilch about the rules in pinyin, and by coincidence didn't really grasp that "Standard Chinese"[1] is really an offshoot of Mandarin until a couple of years ago. Seeing "Crouching Tiger" in Mandarin somehow got me in the mindset that this was "old" Chinese to fit with the time period of the film. Not so much.
  - 4y ago

1vuio0pswjnm7 4y ago

Do docdroid.net URLs last longer than 60 days with no views. Do they get archived by IA. Here's text-only version of the complaint, at a permanent URL that gets archived at IA: https://www.courtlistener.com/docket/67092867/1/commodity-futures-trading-commission-v-zhao/ https://www.courtlistener.com/docket/67092867/1/commodity-fu...

kumarski 4y ago

The full force of the federal gov't is coming for CZ. I spoke with several people who work at various AGs and folks in DC. It seems they will come down hard on him for a variety of reasons and through a variety of methods.

1vuio0pswjnm7 4y ago

SBF + CZ = dumb and dumber All the smartest people are working on AI. At least until they are laid off. Desperation sets in. What next. Hype, hype, hype. Never give up.

sub7 4y ago

It's not over until $usdt falls - but Binance was basically a more competent FTX so this is a good development

ChocoluvH 4y ago

Damn. Time to HODL?