- US officials including the CFTC are scrutinizing crypto exchange Binance for possible insider trading, Bloomberg reported.
- They are looking at whether it or its employees exploited access to data on millions of transactions, including to make trades.
- The company reportedly already faces probes into whether its platform is used for money laundering and tax evasion.
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Binance is being probed over possible insider trading and market manipulation by US regulators, who are looking into whether the crypto exchange exploited its access to data on millions of transactions, Bloomberg reported.
Officials are examining whether the company or its employees profited from this access, including by trading on customer orders before executing them, Bloomberg said Friday, citing people with knowledge of the matter.
The Commodity Futures Trading Commission, which regulates US derivatives markets, is involved in the review and has approached potential witnesses, according to the report.
Binance is able to view millions of crypto transactions as it provides a platform for people to trade their digital tokens. It logged trading volumes worth almost $30 billion on September 14, making it the biggest crypto exchange in the world, according to Statista data.
“At Binance, we have a zero-tolerance policy for insider trading and a strict ethical code related to any type of behavior that could have a negative impact on our customers or industry,” the company said in a statement to Insider, but did not confirm the Bloomberg report.
“There is a long-standing process in place that our security team follows to investigate and hold those accountable that have engaged in this type of behavior, immediate termination being minimal repercussion.”
The move marks an intensification of scrutiny from the CFTC, which is already reported to be looking into whether Binance allowed US residents to trade derivatives linked to bitcoin and other digital tokens. The company, which has no formal headquarters, has attracted the attention of regulators around the world over a potential lack of compliance with local securities rules.
The CFTC declined to comment on its involvement in the probe.
The crypto exchange is already dealing with a probe by the Justice Department and Internal Revenue Service into whether its services have been used as a channel for money laundering or tax evasion, according to reports. The agencies have reportedly been looking into the company’s operations for months, but no findings have been released or action taken.
Binance generated between $800 million to $1 billion in profit in 2020 from a surge of consumer interest in digital currencies, CEO Changpeng Zhao told the Information in a recent interview. He also revealed the company’s US arm is considering an IPO within the next three years.
Zhao outlined Binance’s policies to prevent insider trading in a July blog post, saying the company separates the unit concerned with the issuance of new tokens from the rest of its staff.
He also said Binance plans to double the size of its global compliance team by the end of 2021 as the crypto industry faces a “lot of uncertainty.”
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