FTC v. Binance: Everything You Need to Know

Case Number: 1:23-cv-01887

Plaintiff: FTC

Defendant: Binance

Judge: Manish Suresh Shah

Filing Date: March 27, 2023

Location: IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

TABLE OF CONTENTS

COMPLAINT FOR INJUNCTIVE AND OTHER EQUITABLE RELIEF AND CIVIL MONETARY PENALTIES UNDER THE COMMODITY EXCHANGE ACT AND COMMISSION REGULATIONS

I. SUMMARY

II. JURISDICTION AND VENUE

III. PARTIES

• A. The CFTC
• B. Defendants
• C. Other Relevant Entities

IV. RELEVANT STATUTORY BACKGROUND AND LEGAL FRAMEWORK

• A. Applicable Provisions Under the Commodity Exchange Act and Regulations

• B. Provisions Authorizing Imposition of Derivative Liability Under the CEA

• C. Anti-Evasion Principles in the CEA and Regulations

  
  

V. FACTS

• A. Overview of the Binance Platform and Operations
• B. Relevant Financial Products Offered by Binance
• C. Binance’s Proprietary Trading Activity on Binance
• D. Binance’s Presence in the United States
• E. Zhao Controls Binance and Operates Binance as a Common Enterprise
• F. Binance’s Superficial Efforts to Limit Trading by United States Customers and Internal Recognition That Its Compliance Program Was Just “For Show”
• G. Binance Was Aware of United States Regulatory Requirements but Ignored Them
• H. Binance Has Guided United States Customers to Evade Its Compliance Controls Through the Use of VPNs and Other Creative Means
• I. Binance Has Directed Its VIP Customers to Evade Compliance Controls, Including Through Submission of “New” KYC Documents
• J. Binance Knowingly Concealed the Presence of United States Customers In Internal Documents and Data
• K. Binance Has Relied On “Brokers” to Introduce Customers to the Binance Platform Without Effective Access Controls
• L. Examples of Market Participants Currently Trading on Binance and Binance’s Efforts to Help Them Evade Its Compliance Controls

Trading Firm A

Trading Firm B

Trading Firm C

VI. VIOLATIONS OF THE COMMODITY EXCHANGE ACT AND REGULATIONS

COUNT I

COUNT II

COUNT III

COUNT IV

COUNT V

COUNT VI

COUNT VII

VII. RELIEF REQUESTED

JURY TRIAL DEMANDED