Page 36 - 期货和衍生品行业监管动态（2023年11月刊）

期货和衍生品行业监管动态

customers, who for most of the relevant period were not required to provide any

identity-verifying information before trading on the platform. The complaint further

charged Zhao, Binance, and Lim with willful evasion of the CEA.

The proposed order finds Binance offered and executed commodity derivatives

transactions to and for U.S. persons beginning in July 2019 through its operation of the

world’s largest digital asset derivatives trading platform. The proposed order further

finds Zhao and Binance implemented a business strategy of willful non-compliance

with the CEA, among other laws, because they believed they would make more money

if they did not follow applicable laws. As part of this strategy, Binance took numerous

affirmative steps to retain commercially valuable U.S. customers, even though Zhao

and Binance were aware that offering commodity derivatives to U.S. persons subjected

them to U.S. law.

The proposed order concludes Binance is liable for failing to register with the

CFTC in numerous required capacities due to Binance’s functioning as an FCM, foreign
board of trade, designated contract market, and/or swap execution facility. It also finds

Binance breached its duties, arising out of its status as an FCM, to implement effective

know-your-customer procedures and to diligently supervise its activities as an FCM.

The proposed order also explains that Zhao and Binance violated CFTC

Regulation 1.6, based on Zhao and Binance intentionally sabotaging and subverting

Binance’s superficial compliance controls, including controls designed to restrict the

participation of U.S. persons.

Specifically, as to Zhao, the proposed order finds he owned and controlled the

opaque maze of entities that operated the Binance trading platform. He was involved in

and responsible for all of Binance’s strategic decisions, including those related to

offering illegal derivatives products. The proposed order thus finds Zhao liable for

Binance’s violations based on his control over the company and his long-running and

well-documented failure to act in good faith concerning Binance’s conduct.

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