Binance CEO Changpeng Zhao and several Binance executives are facing potential indictment in Brazil following a congressional committee’s investigation into financial pyramid schemes.
The committee, led by Deputy Ricardo Silva, released a 500-page report on October 10, which accuses Zhao and the local Binance executives of fraudulent management practices, unauthorized operations, and unapproved securities trading.
According to the report, Changpeng Zhao was the main controller of a convoluted web of legal corporations that Binance and its executives allegedly constructed, seemingly for legal compliance’s sake rather than for justifiable commercial objectives.
The committee also suggests 45 more people be charged with crimes related to their connections to several cryptocurrency businesses, such as 123milhas, a travel agency, and 18K Ronaldinho, a cryptocurrency scheme.
The committee’s recommendations include calling on the Federal Public Ministry to investigate all Binance operations in Brazil, with a focus on potential tax evasion, money laundering, and the financing of organized crime and terrorism.
Additionally, the Brazil Securities and Exchange Commission (CVM) is advised to examine Binance’s sale of derivative products. It’s important to note that these recommendations are not legally binding but serve as suggestions to local authorities, who will decide whether further action is necessary.
Binance has responded to the accusations by stating that it will work with the committee and Brazilian local law authorities. The company vehemently denies the unfounded allegations and attempts to harm it, emphasizing its readiness to participate in productive dialogue about industry issues.
This development in Brazil is part of a wider pattern of regulatory scrutiny that Binance is facing more and more across the globe. Local commodities and securities officials in the US have filed two separate complaints against Binance, both of which claim that the company violated financial regulations.
In July, following the revocation of Binance Australia’s derivatives license, the Australian financial regulator also searched the company’s headquarters. Citing changes in Canadian regulations, Binance announced its plan to leave the market in May.
As the cryptocurrency industry continues to evolve, regulatory authorities worldwide are intensifying their efforts to ensure compliance and protect consumers. Binance, as one of the world’s largest cryptocurrency exchanges, is finding itself at the center of these regulatory challenges, which will likely have significant implications for the broader crypto industry.