The Brazilian Congress indicted Binance CEO CZ
A Brazilian congressional committee has recommended local law enforcement to indict Binance CEO Changpeng “CZ” and three other Binance executives following an investigation into financial pyramid schemes in Brazil.
On October 10, the committee issued a 500-page final report accusing Zhao and local Binance executives Daniel Mangabeira, Guilherme Hadad Nazar and Thiago Carvalho of fraudulent management practices, operating without sufficient authorization and offering trade securities without authorization.
In the report, the committee – chaired by Deputy Ricardo Silva – Binance, Zhao and others “established an opaque network of legal entities, all directly or indirectly controlled by Zhao, with no clear commercial purpose and no other purpose than to evade compliance with the law.”
The report also recommended the prosecution of 45 other people, citing “strong evidence” of involvement in criminal schemes, with people connected to several crypto companies, including the travel firm 123milhas, the crypto plan 18K Ronaldinho and others.
As Silva wrote, Binance has been accused of not complying with regulatory laws in other regulatory systems in Brazil, and Binance's operations are “surrounded by suspicion.”
The committee recommended that the federal public ministry launch an investigation into all of Binance's Brazil-based operations for tax evasion, money laundering and the financing of organized crime and terrorism.
The committee also recommended that Brazil's Securities and Exchange Commission (CVM) open an investigation into Binance's derivatives sales.
Despite being told by the committee to stop trading products, Binance continues to offer them, which is a “repeated violation” of market rules. Binance is already under investigation by the CVM for illegally offering derivatives in the country.
The committee's recommendations are not legally binding and are recommendations to local authorities. The police and other regulatory bodies decide whether or not to take further action.
Binance told Cointelegraph that it “remains committed” to cooperating with the committee and local law enforcement in Brazil.
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While Binance welcomes constructive debate about the challenges facing the crypto industry, it says it “strongly rejects baseless accusations of wrongdoing and attempts to target Binance by our users or employees.”
The regulatory animosity at Binance comes amid a broader crackdown by authorities elsewhere on the exchange.
In the United States, Binance is facing two separate lawsuits from local commodity and securities regulators, alleging that Binance and its top executives violated several financial regulations.
In July, Australia's financial regulator searched Binance's Australian offices after it revoked its trading license months earlier. In May, Binance pulled out of Canada, citing the country's new regulatory controls.
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