CFTC intends to test Binance for insider trading

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The US government has expanded its investigation into Binance Holdings Ltd. Now, questions have been added to it about potential insider trading and market manipulation on the largest cryptocurrency exchange in the world, Bloomberg reports, citing a source familiar with the situation.

The investigation intends to determine whether Binance or its employees took advantage of their position to benefit from customers. The authorities admit that the exchange could conduct its own trades based on information about customer orders before executing them.

The press service of Binance said it adheres to a “zero tolerance” policy towards insider trading and “strict moral standards” to prevent possible violations that could harm customers or the cryptocurrency industry. Binance’s security team uses well-established practices to investigate and prosecute delinquent employees. Dismissal is only the minimum possible punishment, the company added.

The CFTC is taking part in the investigation and has been in contact with potential victims in recent weeks. No charges were filed against Binance; also, they may not be on the basis of the results of the investigation.

Earlier it became known that the Department of Justice and the US Internal Revenue Service opened their own investigation into possible money laundering and tax evasion on Binance. The relevant work has been underway for several months, and some time may pass before a decision is made to bring specific charges, Bloomberg notes.

In addition, the CFTC is interested in whether US residents have participated in derivatives trading on Binance. The agency routinely shares its findings with other federal agencies and has requested internal data and correspondence from Binance. Specifically, the CFTC is trying to figure out where Binance’s servers are located.

In August, the former head of the Office of the Comptroller of the United States Currency, Brian Brooks, abruptly stepped down as CEO of Binance.US after only three months, citing differences of opinion over the firm’s strategic direction.

The CFTC investigation is coordinated from Chicago and is conducted with the participation of staff who worked on the case of the competing exchange BitMEX. Last month, BitMEX agreed to pay a $ 100 million fine for the settlement of claims by the CFTC and the Financial Crimes Enforcement Network (FinCEN) regarding access to American derivatives trading and inadequate anti-money laundering measures. BitMEX has neither acknowledged nor denied the violations, but the exchange’s management, including its CEO Arthur Hayes, was forced to step down last October. Now they are awaiting trial on charges brought against each personally, which, as lawyers note, is very unusual for this kind of financial crimes.

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