Regulators are putting more pressure on Binance for possible abuses of its cryptocurrency exchange. According to Bloomberg sources, US officials are expanding their investigation into Binance to include market manipulation and insider trading. Although the company has not been accused of wrongdoing it is reported that Commodity Futures Trading Commission investigators inquired with potential witnesses to determine the location of Binance servers and whether any US cases can be pursued.
The commission had already launched an investigation into derivatives linked to cryptocurrency. According to reports, it is looking for Binance data which might reveal sales of these derivatives to American customers. This would violate regulations prohibiting such sales without registrations. The Internal Revenue Service and Justice Department are also investigating possible money laundering on this exchange.
There are no guarantees that action will be taken. Binance is being investigated by the CFTC and Justice Department for several months. Any decisions could take a while.
Binance stated that it was not below-board, which is not surprising. Bloomberg was told by a spokesperson that the exchange has a zero tolerance approach to insider trading. It also adheres to ethical codes and security guidelines in order to prevent such actions. According to the company, it fires only those who violate its rules. The CFTC declined to comment.
If Binance is accurate, the increased scrutiny would be part of a wider US crackdown against cryptocurrency. Officials worry that the absence of regulation and consumer protections could hurt customers who are expecting the same protections as with traditional money. Insider trading and accountability are the key issues in this instance. This could lead to loss of valuable investments and undermine trust in Binance and other cryptocurrency exchanges.
