Bitcoin tumbles as CFTC sues crypto exchange Binance

CFTC alleged that Binance failed to register with the agency, despite its “solicitation of and reliance on customers located in the United States to generate revenue and provide liquidity for its various markets,” according to a filing with the federal court in Illinois Monday. 

“Binance and its officers, employees, and agents have instructed U.S. customers to use virtual private networks (VPNs) to obscure their location,” CFTC wrote in the filing. 

Binance.com doesn’t provide access to U.S. customers, the company has said, while Binance.U.S., which claims to be a separate legal entity, targets U.S. customers.

The lawsuit filed by the CFTC is “unexpected and disappointing”, a Binance spokesperson told MarketWatch via email. The company said it has been working collaboratively with the CFTC for more than two years. It has also made significant investments over the past two years to ensure that the company does not have US users active on its platform, the spokesperson said.

U.S. regulators have been doubling down their efforts to increase oversight of the crypto industry, after several major companies collapsed last year, resulting in billions of investors’ losses.

Last week, Coinbase
COIN,
-8.27%,
the largest crypto exchange in the U.S., said it received a Wells Notice from the Securities and Exchange Commission,, which could lead to formal charges.

In February, the SEC charged Kraken for failing to register its staking program. The exchange ended the program in the U.S. and paid $30 million in penalties to settle the charges, without admitting or denying the allegations.

Meanwhile, the New York Department of Financial Services ordered stablecoin issuer Paxos to stop minting BUSD, a stablecoin issued by Paxos and branded by the world’s largest crypto exchange Binance. Paxos also received a Wells notice from the SEC, which is considering recommending an action alleging that Paxos failed to register BUSD, as a security.