Cryptocurrency exchange Binance is being investigated by the Commodity Futures Trading Commission (CFTC). To determine if U.S. residents are trading derivatives on the platform.
“We take a collaborative approach in working with regulators around the world and we take our compliance obligations very seriously,” Binance said in a statement.
Derivatives trading in the U.S. is strictly overseen by the CFTC. The agency similarly took action against BitMEX last year on allegations that it allowed U.S. customers to trade derivatives products.
The investigation led to an indictment against BitMEX by the CFTC and the U.S. Department of Justice. However, it is worth noting that Binance hasn’t been accused of any wrongdoing; The CFTC is merely looking into the possibility.
Shortly after reports surfaced that Binance was being probed, the exchange’s founder and CEO Changpeng Zhao offered a response on Twitter. “It’s not a bull market without some FUD. Ignore FUD, keep BUIDLing,” he tweeted after the news.
“FUD” is an acronym for “fear, uncertainty and doubt” that is often used to refer to unwelcome news in the crypto industry.
In response to the investigation, Binance has hired former U.S. Senator Max Baucus. Who will serve as a policy advisor and also navigate the exchange’s relationship with regulators.
From 2014 to 2017, Baucus also served as former President Barack Obama’s ambassador to China.
Binance does not directly serve U.S. customers and instead uses a San Francisco-based entity operating as Binance.US to handle matters. The parent exchange previously announced plans to remove all U.S. customers from its platform.
Binance native token BNB plunges in wake of CFTC probe
After news broke that the CFTC was investigating Binance. The exchange’s native token, BNB, dropped by 6%.
The price of Bitcoin additionally dropped 4.53% following the reports. Slipping to an intraday low of $55,011 on the Bitstamp exchange.
“Rumors are rapidly circulating that the @CFTC is investigating @binance for letting Americans trade on the platform,” tweeted OKEx senior editor Adam James.
“This is responsible for the current BTC and cryptocurrency dip. Wonder why Binance dropped that lawsuit against those ForbesCrypto reporters.”