US regulator sues top crypto exchange Binance, CEO

The world's biggest crypto exchange Binance and its CEO and founder Changpeng Zhao were sued by the US Commodity Futures Trading Commission (CFTC) on Monday for operating what the regulator alleged were an "illegal" exchange and a "sham" compliance programme.

The CFTC sued Binance, Zhao and its former top compliance executive with "willful evasion" of U.S. law, "while engaging in a calculated strategy of regulatory arbitrage to their commercial benefit."

Zhao, a billionaire who was born in China and moved to Canada at the age of 12, called CFTC's complaint as "unexpected and disappointing."

"Upon an initial review, the complaint appears to contain an incomplete recitation of facts, and we do not agree with the characterization of many of the issues alleged in the complaint," Zhao said in a statement.

The lawsuit comes amid a broader and increasingly high-profile crackdown on crypto companies. For years, U.S. prosecutors and civil investigators have targeted crypto firms for illegal offerings and failures to comply with rules designed to prevent illicit activity. But the pace of such government activity has surged recently.

The CFTC said in its complaint on Monday that from at least July 2019 to the present, Binance "offered and executed commodity derivatives transactions on behalf of U.S. persons" in violation of U.S. laws.

Binance's compliance program has been "ineffective" and the firm, under the direction of Zhao, told employees and customers to circumvent compliance controls, the CFTC said, citing a number of practices first reported by Reuters in a series of investigations into the exchange last year.

The CFTC also accused Binance's former Chief Compliance Officer Samuel Lim of "aiding and abetting" Binance's violations. Lim did not immediately respond to calls and messages from Reuters.

A spokesperson for Binance, which dominates the global digital asset sector, said the firm will continue to "collaborate" with regulators.

Binance has made "significant investments" to ensure it does not have U.S. users on its platform, the spokesperson said.

CFTC Chairman Rostin Behnam said in a statement that Binance executives knew for years "they were violating CFTC rules, working actively to both keep the money flowing and avoid compliance."

The CFTC is responsible for oversight of commodities and derivatives markets, including for Bitcoin. Firms such as brokers that facilitate U.S. customers' trading of such products are required to register with the agency