Association denounces cryptocurrency brokerage firm to Central Bank, CVM and Prosecutors

RIO DE JANEIRO, BRAZIL – The Brazilian Cryptoeconomy Association (ABCripto) said on Friday, March 5th, that it has requested the Central Bank, the Federal Prosecutor’s Office (MPF) and the Securities and Exchange Commission (CVM) to investigate potential irregular practices by Binance cryptocurrency broker in Brazil.

In a statement, the association said it forwarded the complaints on Tuesday, March 2nd. It said “Binance is not authorized to operate as a financial and payment institution in the country.”

“ABCripto reports that it has closely followed the development of the activities in Brazil of the company ‘Binance Futures’, based in Malta,” says the note calling on the Central Bank, MPF and CVM to “supervise the brokerage firm and its alleged legal representatives.”

In the statement, ABCripto’s executive director, Rodrigo Monteiro, says the decision to lodge complaints is to “prevent misconduct from causing moral and reputational risks that will affect the market as a whole.”

“What can be noted is that there is a worrying disregard for compliance with the Brazilian rules that govern the proper operation of the financial and capital markets, which endangers investors and the credibility of regulatory and self-regulatory agencies. News reports abroad state that this seems to be a deliberate strategy of the company, which further exacerbates this concern,” says the executive.

In the note, ABCripto requests that the MPF should adopt judicial measures to prevent losses or seek compensation for damages caused to holders of securities and market investors, given that the case concerns relevant public interest.

In addition, it requests that the Federal Prosecutor’s Office “lodge a public civil liability suit to prevent losses to investors in the securities market, seeking the suspension and/or termination of Binance’s irregular activities in the Brazilian market.”

Earlier this year, the São Paulo Prosecutor’s Office had already ordered the Federal Police to open an investigation into Binance’s potential irregularities in Brazil, after receiving a complaint from the CVM in July 2020.

According to the market regulator, there are indications that the company offers “securities intermediation services unauthorized by the CVM, a fact that typifies, at least in terms of evidence, the crime provided for in art. 27-E of Law n. 6386/76.”

Binance replies

In a statement, Binance replied saying that “the accusations brought are unfounded and incorrect, and are anti-competitive in nature.”

According to the brokerage, it reserves the right to take further action to protect its reputation. “Binance has always worked with regulators around the world in this rapidly developing market and is committed to continuing to do so from here on,” the statement said.

Founded by Chinese-Canadian Changpeng Zhao – also referred to simply as CZ – Binance is considered, as of 2018, the largest cryptocurrency brokerage (exchange) in the world in terms of trading volume.

The brokerage firm’s note in full:

“Binance is the world’s largest cryptocurrency broker by volume and operates globally taking the benefits of blockchain technology to millions of its users across the globe. The charges brought are unfounded and incorrect and are anti-competitive in nature. Binance will reserve all its legal rights to take further action to protect its reputation. Binance has always worked with regulators around the world in this rapidly developing market and is committed to continuing to do so from here on.”

Where is Binnce headquartered? It is a mystery.

Binance is a cryptocurrency exchange that provides a platform for trading various cryptocurrencies. As of January 2018, Binance was the largest cryptocurrency exchange in the world in terms of trading volume.

Binance was founded by Changpeng Zhao, a developer who had previously created high frequency trading software. Binance was initially based in China, but later moved out of China due to China’s increasing regulation of cryptocurrency.

CEO Changpeng Zhao had previously founded Fusion Systems in 2005 in Shanghai; the company built high-frequency trading systems for brokers. In 2013 he joined Blockchain.info as the third member of the cryptocurrency wallet’s team. He also worked at OKCoin as CTO for less than a year, a platform for spot trading between fiat and digital assets.

The company was founded in China but moved its servers and headquarters out of China and into Japan in advance of the Chinese government ban on cryptocurrency trading in September 2017. By March 2018 the company had established offices in Taiwan.

BNB, the exchange token of Binance, has become the third largest crypto by market capitalization for the first time as its price rally continues.

Data from CoinGecko and Binance-owned CoinMarketCap both show that BNB’s market capitalization has surpassed that of Tether. As of writing, BNB’s market capitalization stands at US$34.4 billion.

In March 2018, Binance announced its intentions to open an office in Malta after stricter regulations in Japan and China. In April 2018, Binance signed a Memorandum of Understanding (MoU) with the Government of Bermuda. Months later, a similar memorandum was signed with the Malta Stock Exchange to develop a platform for trading security tokens.

In 2019, company announced Binance Jersey, an independent entity from its parent Binance.com exchange, with the aim to expand its European influence. The Jersey-based exchange offers fiat-to-crypto currency pairs, including the Euro and the British pound.

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