CFTC Launches Probe Into Binance on Unregistered Derivatives Sales

CFTC Launches Probe Into Binance on Unregistered Derivatives Sales

The world’s largest cryptocurrency exchange, Binance, is reportedly under investigation by the US Commodity Futures Trading Commission (CFTC) for letting residents trade derivatives without having the necessary registration. Although the CEO of the company, Changpeng Zhao, has come out to call the accusation a “FUD,” it didn’t stop the cryptocurrency market from taking the news into account and dropping significantly.

Bloomberg recently reported that the CFTC has opened an investigation to determine if Binance has broken any US rules. More importantly, the Commission is probing the company to ascertain if it allows US citizens to trade cryptocurrency derivatives without properly registering with the organization.

Nonetheless, the recent discovery shows that Binance hadn’t been officially accused of anything yet and that the current investigation could acquit the company.

The CFTC recognizes some crypto assets, such as Bitcoin and Ethereum, as commodities and claims jurisdiction over all futures and other derivatives linked to them.

A Binance spokesperson recently commented that the exchange would assume a “collaborative approach in working with regulators around the world, and we take our compliance obligations very seriously.”

Changpeng Zhao. Source: Google

CZ, the CEO of Binance, noted indirectly on Twitter that “it’s not a bull market without some FUD” and encouraged his followers not to be fazed by the development. FUD is popularly used to acronymize fear, uncertainty, and doubt.

Cryptocurrency Market Witnesses Sharp Drop On the News
Bitcoin and the rest of the cryptocurrency market dropped significantly following the announcement of the probe. The benchmark cryptocurrency dropped sharply by about $1,500 from $56,500 to $55,000.

The exchange’s native coin, Binance Coin, fared even worse on the news. BNB reportedly fell by about 10% under a few minutes.

 

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Author : Azeez Mustapha

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Azeez Mustapha is an experienced author, trader, markets analyst, signals strategist, and funds-manager.