Changpeng Zhao, CEO of the world’s largest crypto exchange Binance, has responded to a scathing lawsuit against his firm by the US Commodity Futures Trading Commission (CFTC).
On March 27, the CFTC filed a series of complaints against Binance and Changpeng Zhao in a lawsuit accusing them of insider trading and evading KYC (Know Your Customer) controls.
A few hours later, the Binance boss responded to what he called an “unexpected and disappointing civil complaint.”
His frustration was compounded by the fact that the firm had been cooperating with US regulators over the past two years.
“The complaint appears to be an incomplete description of the facts, and we do not agree with the characterization of many of the issues alleged in the complaint,” he said.
Binance CEO eats his own dog food
Among the allegations was that Binance has traded on its platform. In addition, the CFTC claimed that there were “approximately 300 ‘house accounts’ that are all directly or indirectly owned by Zhao.”
CZ added that Binance.com “does not trade for profit or “manipulate” the market under any circumstances.” He added that the company’s revenue is in crypto, so it needs to be converted from time to time to fiat or other cryptocurrencies to cover expenses:
“Personally, I have two accounts on Binance: one for the Binance Card, one for my crypto holdings. I make my own dog food and store my crypto on Binance.com. Or even need to change crypto from time to time for card payments.”
“Eat your own dog food” is a colloquial expression describing a company using its own products or services for its internal operations.
CZ also said that Binance has a 90-day no-day-trading rule for employees. This means that they are not allowed to sell a coin within 90 days of their most recent purchase or vice versa.
KYC violation allegation
Regarding allegations of the firm evading KYC controls, he said it was the first global (non-US) exchange to implement a mandatory KYC program.
He added that Binance.com blocks US users by nationality and IP address. However, the CFTC accused the exchange of encouraging US traders to use VPNs (Virtual Private Networks) to avoid blocks.
The markets have reacted badly to the news, leaving the space with $30 billion in the last 12 hours. As a result, a fall of 2.6% has reduced the total market capitalization to $1.17 trillion.
At press time BNB is down 5.8% to $309.
On the bright side, such a modest move is not unusual for the markets, and things have stabilized at current levels.
BeInCrypto has reached out to the company or individual involved in the story for an official statement regarding the recent developments, but has not yet received a response.