CZ, the CEO of Binance, disputes claims of market manipulation

Updated: 02 April 2023

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In a lawsuit filed against Binance on March 27, the Commodities Futures and Trading Commission presented allegations that Changpeng “CZ” Zhao has rejected.

According to Binance CEO Changpeng “CZ” Zhao, the cryptocurrency exchange “does not trade for profit or’manipulate’ the market under any circumstances,” in contrast to claims made by the Commodities Futures and Trade Commission.

The chief executive addressed the CFTC’s action against Binance and CZ in a blog post on March 28 and called the claims “an incomplete recitation of facts,” referring to the trading and compliance practices that were allegedly unlawful.

The CFTC claimed in its complaint that Binance had used 300 “house accounts” to trade on its own platform without properly disclosing to its clients that it was doing so in its Conditions of Use.

The CFTC has also charged Binance with maintaining the information as “top secret” and claimed the exchange declined to answer subpoenas issued by the regulator for information on its trading behavior.

According to information and belief, Binance has not implemented any anti-fraud or anti-manipulation controls or surveillance over the trading activities of Merit Peak, Sigma Chain, or its 300 or more house accounts.

Although Binance “trades” in a variety of circumstances, CZ countered that this is primarily done to transfer its cryptocurrency revenue into fiat or other currencies to pay for expenses.

“I personally have two accounts at Binance: one for my cryptocurrency holdings and one for my Binance Card. I consume the dog chow we make and keep my cryptocurrency on Binance.com. I occasionally need to convert cryptocurrency to pay for my own bills or for the Card, he continued.

Moreover, CZ denied allegations that his workers had engaged in “insider trading,” noting that Binance has a 90-day no-day-trading policy for staff. CZ continued: This is to stop any staff from engaging in active trading. Additionally, we forbid our staff from engaging in futures trading. He went on to say that staff were not allowed to purchase or sell coins when they had “private information” about the buyer or seller. He also said:

I strictly abide by these rules myself. Moreover, I have never taken part in Earn, Margin, or Futures on Binance. I am aware that creating a strong platform that benefits our users is the best use of my time.

Zhao referred to the current CFTC filing as “surprising and disheartening” because the company has been cooperating with the regulator for more than two years.

Additionally, the CFTC said that top employees of the company “actively encouraged violations of U.S. law,” including “assisting and teaching” American clients on how to get around Binance’s own compliance measures, and that Binance’s compliance program was only “For Show.”

Best-in-class technology for compliance

CZ, though, insisted that its efforts to comply were not weak. He said that Binance.com has created “best-in-class” technology to assure compliance and that more than 750 people are currently working to make sure the company complies with anti-money laundering (AML) and know your customer (KYC) laws: We have so far handled more than 55,000 LE requests and helped US LE seize or freeze more than $125 million in money in 2022 alone and $160 million so far in 2023. Also, CZ noted that Binance.com has the highest licenses of any cryptocurrency trading platform with 16 for providing services for trading digital assets.