The Commodity Futures Trading Commission (CFTC) lawsuit against Binance, the largest crypto exchange by trading volume, is, in the words of Timothy Massad, a “big deal.”
“If you read the complaint, there are so many details in it, it suggests that [CFTC] had some information from people on the inside, said the regulator’s former chairman, now a fellow at Harvard University’s John F. Kennedy School of Government. He told CoinDesk TV’s “First Mover” on Tuesday that the level of detail is “really quite striking.”
The CFTC, which is responsible for regulating the U.S. derivatives markets, on Monday filed a lawsuit against Binance and its founder, CEO Changpeng Zhao, for allegedly offering unregistered derivatives products and helping U.S.-based clients circumvent compliance checks through the use of virtual private networks ( VPN).
“This complaint basically says that Binance and Zhao themselves knowingly and systematically cultivated US business, helped US persons get around these restrictions and even did things internally to try to hide the amount of US business they were doing,”[ads1]; Massad said , also director of the Digital Assets Policy Project.
In a blog post, Zhao said the complaint “appears to contain an incomplete recitation of the facts,” adding that the exchange does not agree “with the characterization of many of the issues alleged in the complaint.”
Will the CFTC’s lawsuit against Binance finally prompt congressional lawmakers to pass legislation to regulate the crypto industry in the United States? Massad said that is unlikely.
“I don’t see the movement toward a consensus on that in Congress,” said Massad, who led the CFTC for nearly three years during the Obama administration.
“I think there are quite a few views from those who are very skeptical of crypto and don’t want to pass a law that they think will legitimize it too much, and those who … believe in its innovative potential and want to see greater regulatory clarity and perhaps regulations that allow for more innovation,” he said.
In the meantime, the agency’s proceedings against Binance will take some time, he said. At least for now, “we’ll just have to see these enforcement actions play out.”