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On March 27, the Commodity Futures Trading Commission (CFTC), the U.S. derivatives regulator, charged three Binance entities (collectively Binance) and its founder and chief compliance officer (CCO) with numerous violations of the Commodity Exchange Act (CEA) and CFTC regulations.

CFTCs complaint does not break new ground by advocating novel legal theories, but it is remarkable in its thoroughness (73 pages), depth and the comprehensive nature of the allegations, and gives the impression that the CFTC decided to take this opportunity to clearly explain the reach of its jurisdiction and the application of the CEA to virtually all aspects of the digital asset commodity industry.

At the core of CFTCs complaint is the allegation that Binance, its founder and the CCO chose to knowingly disregard applicable provisions of the CEA while engaging in a calculated strategy of regulatory arbitrage to their commercial benefit. The complaint further explains application of the CEA and identifies the following violations:

The complaint is asking for a draconian set of remedies, including a permanent ban on participating in spot or derivative markets involving digital asset commodities and a permanent registration ban with the CFTC meaning that if Binance chose to remedy its violations of the CEA by registering as an FCM, a DCM or a SEF, it will not be allowed to do so, which effectively means a complete ban on Binances operations in the U.S. In addition, the CFTC is asking for a full disgorgement and restitution of all gains from doing business in the U.S. (and theoretically this disgorgement and restitution may apply not only with respect to only U.S. customers, but all of Binances customers). Finally, the complaint is asking for civil monetary penalties under the CEA, which can be interpreted very broadly and may exceed billions, as demonstrated by CFTCs previous enforcement actions.

Continued here:

CFTC Charges Binance and its Founder with Multiple CEA Violations - JD Supra