Binance CEO, other company leaders at risk of Brazil indictment after crypto probe
BRASILIA , Brazil – In the latest blow to Binance’s global ambitions, a Brazilian congressional committee has recommended the indictment of four of the company’s senior leaders, including its founder and chief executive Zhao Changpeng.
The committee, which had been conducting a probe into crypto-related ponzi schemes in Brazil, can only make suggestions.
Brazilian police will decide whether to proceed with actual indictments.
The Brazil move comes as regulators in countries ranging from Australia to France to the United States have trained their sights on the activities of the world’s largest crypto exchange.
The committee accused Mr Zhao and three local Binance employees of fraudulent management, of offering or trading in securities without prior authorisation and of operating a financial institution without authorisation.
Binance is “surrounded by suspicion” in Brazil, lawmaker Ricardo Silva wrote in the report accompanying the committee’s recommendations on Monday.
In a statement sent to Bloomberg by e-mail, Binance said it went to “great lengths” to actively collaborate with the committee.
However, the exchange “strongly rejects any attempts to make Binance a target or even expose its users and employees with allegations of bad practices without any proof, amid competitive disputes given the company’s leadership position in Brazil and in the world”.
The committee further recommended that Brazil’s Federal Public Prosecutor’s Office scrutinise the tax compliance of the crypto exchange’s local unit and a separate arm, Binance Capital Management.
The legislators also suggested that the country’s securities regulator, known as CVM, investigate Binance’s sale of derivatives despite receiving a stop order.
Those ongoing transactions represented “a repeated violation of the securities market rules”, the committee said in its final report.
Binance’s Brazil unit is already facing a CVM probe related to its sale of derivatives.
In August, the securities regulator rejected an offer of a settlement worth 2 million reais (S$539,000) proposed by local Binance executives.
As a result, the Brazil unit is facing further penalties and fines.
The crypto exchange is also in limbo regarding its proposed acquisition of Brazilian securities brokerage Sim;paul Investimentos, which it announced in March 2022.
Binance said in a statement at the time that the transaction would “require the approval of the regulatory authorities, including the Central Bank of Brazil”.
Binance has not yet received that approval.
Pending rules in Brazil would require international exchanges to have proper local licensing, similar to European crypto regulation regimes that call for a registered domestic office.
Binance has said that it has no particular global or regional headquarters. BLOOMBERG
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