A Brazilian congressional committee has taken a significant step in what appears to be a growing international crackdown on cryptocurrency exchanges. The committee has recommended the indictment of four senior leaders of Binance, one of the world’s largest cryptocurrency exchanges. The individuals facing potential charges include Changpeng Zhao, Binance’s founder and CEO, known as CZ.
The committee’s actions follow an investigation into crypto-related activities in Brazil, particularly focusing on potential Ponzi schemes. While the committee can only provide recommendations, it’s the Brazilian police who will ultimately decide whether to pursue formal indictments.
The accusations against the exchange and its leaders are severe. These include allegations of fraudulent management, unauthorized trading of securities, and operating as a financial institution without proper authorization. According to the committee’s report, Binance is under intense suspicion in Brazil, emphasizing the seriousness of the situation.
Binance Strongly Denies Accusations
In response, the exchange has vehemently denied these claims and expressed its commitment to cooperating with the committee’s investigation. They strongly reject any efforts to damage their reputation or subject their users and employees to unverified accusations.
The Brazilian committee made several recommendations regarding the scrutiny of the exchange’s activities. They advised the Federal Public Prosecutor’s Office to examine the tax compliance of both Binance’s local unit and Binance Capital Management.
In addition, they called for an investigation by the country’s securities regulator, CVM, into the sale of derivatives by Binance despite receiving a stop order.
These developments occur against a backdrop of ongoing regulatory scrutiny in Brazil surrounding Binance’s operations, including a CVM probe related to derivatives sales. Furthermore, the pending acquisition of Brazilian securities brokerage Sim; paul Investimentos by the exchange is still awaiting regulatory approval.
The exchange’s situation in Brazil mirrors the increasing international scrutiny the cryptocurrency exchange faces. Regulators in various countries, including the UK, have turned their attention to its activities, signaling the challenges and regulatory hurdles faced by the crypto industry on a global scale.
Similarly, as per a separate report, the UK’s Financial Conduct Authority (FCA) imposed restrictions on Binance’s UK-approved partner, Rebuilding Society, concerning financial promotions compliance.
The FCA’s intervention restricts Rebuilding Society from approving financial promotions for unauthorized crypto-asset service providers, marking another regulatory setback for the exchange’s operations in the UK.
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