Binance Faces Probe From US Regulator For Insider Trading And Market Manipulation

Binance, the world’s biggest cryptocurrency exchange platform, is reportedly now being probed by the United States Commodity Futures Trading Commission (CFTC), for insider trading and market manipulation.

According to a Bloomberg report, investigators from the Commodity Futures Trading Commission (CFTC)– the agency that regulates the United States derivatives markets, are investigating whether Binance or its employees profited by taking advantage of its customers, citing people with knowledge of the matter, who asked to remain anonymous due to the confidential nature of the probe.

Binance operates one of the largest cryptocurrency exchange platforms by market volume, carrying out millions of transactions. U.S officials are looking into whether or not the crypto exchange giant took advantage of that access, including by trading on customer orders before executing them, and have reached out to potential witnesses, one of the sources said.

In response to the purported scrutiny, Binance, in a statement, debunked any claim of unethicality, or criminality, in their dealings. A spokesperson for Binance said the firm has a “zero-tolerance” policy for insider trading and a “strict ethical code” to prevent any misconduct that could hurt its customers or the crypto industry. The spokesperson added that Binance’s security team has long-standing guidelines for investigating wrongdoing and holding workers accountable, with termination being the minimal repercussion.

The Commodity Futures Trading Commission’s scrutiny intensifies the heat that Binance has been experiencing from global regulators. Binance, in the past months, has been facing probes from regulators around the world, including Japan, Singapore, Italy, Germany, Cayman Islands, Lithuania, Thailand, Netherlands, Hong Kong, South Africa, Malaysia, and the United Kingdom. The regulators claimed that Binance was operating without authorization in their jurisdictions, and imposed measures that restricted the activities of the exchange platform.

Binance has also previously faced a criminal probe from the U.S Justice Department and Internal Revenue Service, which was launched to look into whether Binance has been a conduit for money laundering and tax evasion.

Consequently, Binance has had to rein in its product offerings such as high leverage and trading of stock tokens and has withdrawn from some jurisdictions, such as Singapore and Ontario, Canada. It is also facing legal heat from some of its customers –a group of Binance customers who have banded together to take on Binance after they suffered trading losses due to Binance’s technical outage in May, in a bid to recover their losses.

The consistent probes from regulators worldwide have thrown Binance in the limelight and have been a source of concern to many investors and customers. The firm has however taken significant moves in efforts to become a regulated firm. In August, as part of its attempt to comply with global watchdogs, Binance hired Greg Monahan – a former US Treasury Criminal Investigator, as its new Global Money Laundering Reporting Officer. The exchange platform also employed Richard Teng and Leigh Travers as CEOs of its Binance Singapore and Australia subsidiaries, as part of its efforts of building a relationship with regulators and restoring its lost glory. Chief Executive Officer of Binance, Changpeng Zhao, stated that the firm had grown its international compliance team and advisory board by 500 percent since 2020 and that it expects to grow the team by another 1000 percent before the end of the year.