Investigation into largest crypto platform Binance: customers were cheated by staff
Oops, the crypto trading platform Binance is under fire. An investigation is being launched into staff who have harmed customers.
The rumors were there before, but are becoming more persistent. Now, the platform is facing increased pressure from regulators, due to potential abuses at its cryptocurrency exchange. Sources at Bloomberg say US officials have expanded their investigation into Binance. This with possible insider trading and market manipulation. Those are big allegations!
Research on Binance
The company has not (yet) been charged with misconduct. But Commodity Futures Trading Commission investigators have reportedly heard potential witnesses about things like the location of Binance servers (and thus whether the US can prosecute any cases). This committee had already launched an investigation into the sale of derivatives linked to cryptocurrencies. It is reportedly seeking internal Binance data that could show the sale of those derivatives to US customers, violating regulations banning those sales without registrations. The tax authorities and the Department of Justice in America are also investigating possible money laundering practices on the stock exchange. If it can be done there, it will probably also happen elsewhere (the Netherlands?) and that can have serious consequences for Binance.
Binance intervenes
The company has reacted strongly to the allegations. And rightly so, if they are found guilty, it will affect their reputation. A spokesperson told Bloomberg that the exchange has a “zero-tolerance” approach to insider trading, as well as codes of ethics and security guidelines to prevent those actions. The company added that it is firing offenders. It is not clear whether this has also happened.
America is intervening more and more often and harder in cracking down on cryptos. Officials are concerned that the lack of consumer protections (including regulations) could harm customers who sign up for services that expect the same safeguards as with conventional money. In this case, the focus is on liability – insider trading can destroy valuable investments and erode trust in Binance and other crypto exchanges. The investigation into Binance and its outcome will keep people busy for a long time to come.
