Binance exchange is facing issues in Brazil. The Congressional Committee of Brazil has retained that Binance has participated in a pyramid scheme and has been intercepting regulatory requirements. The case of the firm is now forwarded to police authorities in the region.
According to the charges brought by the congressional committee, the trading platform is accused of participating in a pyramid scheme. The committee has also noted that CZ has ulterior motives on account of Binance acquiring various companies in the region.
The statement issued by the committee on this account claims that Binance is categorized as one of the firms that are involved in pyramid schemes that have been perpetrated by Glaidson Acacio dos Santos.
The congressional committee of Brazil has also recommended bringing charges against three top executives associated with Binance exchange. The three people alleged by the legislators are namely Binance CEO CZ, General Director Guilherme Haddad Nazar, and Relations Director for Latin America Daniel Mangabeira.
Brazilian Regulators to Sue Binance for Allegedly Bypassing Regulatory Requirements
The regulators in Brazil have alleged that Binance processed $791.7 million in transactions while ignoring the regulatory requirements. The notification issued by Brazilian regulators retains that Binance transferred 40 billion BRL in 2021 without access to the regulatory institution of Brazil.
In this manner, the regulatory agencies in the region are unable to trace the identification of the customers and the unknown origin of the funds.
It is important to note that the charges are issues in the form of a recommendation and have not transpired into an official investigation. The case has been forwarded to the police department of the region to determine further development on the matter.
The committee has issued a 508 paged report that discusses the issues related to questionable management practices associated with the cryptocurrency trading platform. The report has also purported that CZ acquired various companies in Brazil as a means to bypass compliance with regulatory requirements native to the region.
Vague Network of Illegal Entities
The investigative report issued by Brazilian regulators has claimed that CZ operated a vague network of illegal entities in the region that are operated directly or indirectly by Zhao. The regulators have purported that the executive acquired a series of firms in the region with the purpose of running a pyramid scheme.
At the same time, regulators have also alluded to a unaccounted for statement from Chief Compliance Officer of the firm claiming that the firm intends to evade regulations at all costs.
The report claimed that regulators in Brazil do not have sufficient resources to track users. The regulators have also taken up an issue with the statement from CZ that its HQ is situated wherever it is operational at the moment.
The regulators have claimed that such statements are an attempt to avoid legal liability that is associated with presence of a legitimate company location. At the same time, there is some talk about association of CZ tweets with the collapse of FTX exchange.
There are assertions that CZ tweets cast a shadow on the liquidity crisis of FTX and lead to a bank run that resulted in the catastrophic demise of the trading platform. The regulators hailing from US have made these assertions while Binance exchange is facing charges from the SEC.