Crypto exchange Binance on Tuesday issued a statement responding to the US Commodity Futures Trading Commission (CFTC), after the latter party sued the exchange for allegedly “operating an illegal exchange and a sham compliance programme”.
“This filing is unexpected and disappointing as we have been working collaboratively with the CFTC for more than two years,” the company said.
“Nevertheless, we intend to continue to collaborate with regulators in the US and around the world. The best path forward is to protect our users and to collaborate with regulators to develop a clear, thoughtful regulatory regime,” it added.
What is more, Binance stated that the company has made significant investments over the past two years to ensure that the exchange does not have US users active on its platform.
During that period, the company explained, Binance went from approximately 100 people in its compliance team to around 750 core and supporting compliance personnel today, including almost 80 personnel with prior law enforcement or regulatory agency experience and approximately 260 personnel with professional certificates in compliance.
“We have spent an additional $80,000,000 on external partners, including KYC vendors, transaction monitoring, market surveillance and investigative tools who support our compliance programmes,” the company stressed.
Moreover, the company stated that “consistent with regulatory expectations globally, we have implemented a robust ‘three lines of defence’ approach to risk and compliance”.
According to the announcement, the company’s approach includes but is not limited to ensuring mandatory KYC for all users worldwide, maintaining country blocks for anyone who is a resident of the US, blocking anyone who is identified as a US citizen regardless of where they live in the world, as well as blocking for any devices using a US cellular provider.
Finally, the company also said that it implements blocking of any log-ins from any US IP address, combined with preventing deposits and withdrawals from US banks for credit cards.
It should be noted that in October 2022, Binance Cyprus Limited was granted Class 3 registration as a Crypto Asset Services Provider (CASP) by the Cyprus Securities and Exchange Commission (CySEC).
“This is another milestone in Binance’s regulatory efforts in Europe and follows similar registrations for Binance’s local entities in France, Italy and Spain,” Binance said at the time.
In addition, Changpeng Zhao (CZ), founder and CEO of Binance, said then that “Binance has some of the most thorough AML and CTF compliance policies in the industry”.
“Recognition of the efforts we have made to be on the leading edge of compliance that our registration in Cyprus represents is a testament to that,” he had added, noting that effective regulation that protects users and stimulates innovation is essential to the continued growth of the crypto industry.