A Brazilian congressional panel has recommended local law enforcement action to charge Binance CEO Changpeng “CZ” and three other Binance executives following an investigation into financial pyramid schemes in Brazil.
On October 10, the committee released a 500-page final version a report Chow and local Binance executives Daniel Mangabeira, Guilherme Haddad-Nazar, and Thiago Carvalho were charged with fraudulent management practices, operating without adequate licensing and offering to trade securities without a license.
In the report, the committee — led by Rep. Ricardo Silva — alleged that Binance, Zhao and others “created an opaque network of legal entities, all directly or indirectly controlled by Zhao, with no specific business purpose and no purpose other than to evade compliance.” “With the law.”
The report also recommended the indictment of 45 other people citing “strong evidence” of alleged participation in criminal schemes, with the people mentioned linked to multiple cryptocurrency companies, including travel company 123milhas, cryptocurrency scheme 18K Ronaldinho and others.
With Binance accused of regulatory non-compliance in several other jurisdictions, in Brazil, Binance’s operations were “shrouded in suspicion,” Silva wrote.
The committee recommended that the Federal Public Ministry launch an investigation into all Binance operations in Brazil with a special focus on tax evasion, money laundering, financing of organized crime and terrorism.
In addition, the Commission recommended that the Brazilian Securities and Exchange Commission (CVM) open an investigation into Binance’s sale of derivatives products.
The commission alleged that despite being asked to stop trading derivatives products, Binance continued to offer them, which constitutes a “repeated violation” of market regulations. Binance is already under investigation by CVM for allegedly offering derivative products illegally in the country.
The committee’s recommendations are not legally binding and are suggestions for local authorities. Police and other regulatory bodies will decide whether to go ahead with further action.
Binance told Cointelegraph that it “remains committed” to cooperating with the commission and local law enforcement in Brazil.
Related: The Brazilian Securities Commission plans to establish protection for the token in 2024
Binance said that while it welcomes constructive debate on the challenges facing the cryptocurrency industry, it “strongly rejects our users or employees being subjected to unfounded accusations of bad practices and attempts to make Binance a target.”
The regulatory hostility against Binance comes amid a widespread crackdown on the exchange by authorities elsewhere.
In the US, Binance is looking into two separate cases from local commodities and securities regulators, which allege that Binance and its senior executives violated several financial regulations.
In July, the Australian financial regulator inspected Binance Australia’s offices after its derivatives license was stripped months earlier. In May, Binance exited Canada citing new regulations in the country.
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