Brazil Congressional Committee Wants Binance CEO Changpeng Zhao Indicted

Updated: 11 October 2023

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A Brazilian congressional committee is recommending charges be brought against Binance CEO Changpeng Zhao and three Binance executives amid investigations into crypto-related Ponzi schemes.

The congressional committee accuses Zhao, Daniel Mangabeira, Guilherme Haddad Nazar, and Thiago Carvalho of fraudulent management. It also accuses them of offering unregistered securities and running a financial institution without prior authorization.

A 500-page report by the committee released on Oct. 10 claims that Zhao and the other executives created “an opaque network of legal entities” that lacked a defined business objective, and had the sole purpose of “evading compliance with the law.”

The committee, led by Ricardo Silva, also recommends that the Federal Public Prosecutor’s Office investigate the exchange’s local unit on tax compliance, money laundering, and terrorism financing. And it called for a similar investigation into Binance Capital Management.

The exchange’s derivatives products might also be under probe, with legislators calling upon the Brazilian securities regulator to scrutinize the exchange’s derivatives sales. The committee claims that the platform’s sale of derivatives violated securities market laws.

The report also calls for indicting 45 other individuals, saying there was ample evidence of their involvement in criminal schemes. Some of these individuals are from crypto firms, such as 18K Ronaldinho, banned in Brazil for promoting scams.

3/7:

A Troubling Situation: The ‘18k #Ronaldinho’ scam has prompted official investigations, leading to #Ronaldinho’s summons. His failure to respond to previous summons has raised suspicions about his involvement.

— $BUBBLE Crypton infos 🎙️ (@Cryptoninfos) September 1, 2023

In response to questions from Bloomberg, Binance said it “strongly rejects any attempts to make the leading exchange by trading volume a target or even expose its users and employees with allegations of bad practices without any proof.”

Binance Brazil Under Regulatory Probe

Binance Brazil is already facing another probe.. In August, the securities regulator rejected a settlement offer worth 2 million reais that local Binance executives proposed.

In June, Congressman Alfredo Gaspar proposed that Binance Brazil executive Guilherme Haddad testify on the exchange’s operations. At the time, the legislator accused Binance of using pyramid schemes to enable asset transfers in Brazil.

Binance faces regulatory probes in the US and faces lawsuits from the securities and commodities regulators. In July, Australia’s financial market regulators searched Binance’s offices regarding its halted local derivatives operations.

Bloomberg: Australia’s financial markets regulator searched Binance’s offices in an ongoing probe of the crypto exchange’s now-defunct local derivatives business on Tuesday. ASIC canceled Binance Australia’s license for its derivatives operation in April. https://t.co/IpAaMgMMuq

— Wu Blockchain (@WuBlockchain) July 5, 2023