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In a recent conversation on Twitter under a tweet by analyst and founder of Capriole Investments Charles Edwards, it was mentioned that the head of Binance, Changpeng Zhao, had been using proprietary trading accounts to conduct operations against Binance users.
This was one of the issues that drove CFTC to file a lawsuit against Binance exchange and CZ in person.
CZ and Binance have been trading against their clients, per CFTC
The document filed by the CFTC insists that CZ is "the direct or indirect owner of approximately 300 separate Binance accounts that have engaged in proprietary trading activity on the Binance trading platform." However, CZ has never been registered with the CFTC, it states further.
According to the file, CZ is "the direct or indirect owner of entities that have engaged in proprietary trading activity on the Binance platform." It adds that CZ has been trading on Binance using "two individual accounts."
Besides, Binance does not warn customers anywhere that it actually conducts trading operations against them on the same exchange, the filing says.
The CFTC stated that aside from the above-mentioned things, Binance and CZ have been violating U.S. rules concerning trading derivatives for years. CZ published a blog post in response to the allegations, stating that he and the Binance team do not agree to the "incompetent recitation of facts" by the regulator.
Binance looked at just a few issues raised by the CFTC in his article, including the constant cooperation of Binance with regulators over the past two years, its obligatory KYC verification of accounts and other big issues.
6/23— Adam Cochran (adamscochran.eth) (@adamscochran) March 27, 2023
They also go after the fact of manipulation and self-dealing, identifying there are more than 300 "house accounts" owned by CZ, Merit Peak and Sigma chain used in proprietary trading and note it takes no reasonable anti-fraud or anti-manipulation steps. pic.twitter.com/2SzDwASUK3
Capriole founder on CFTC suing Binance
Charles Edwards, who began the above-mentioned discussion, tweeted that the legal case against Binance is part of the attempts by the current banking system to fight the crypto space. "They fight you, then you win," he tweeted, reminding the community that currently the U.S. banking system is undergoing great stress.
Over the past two weeks, he continues, U.S. regulators have used against crypto all tools from their arsenal as they are angry that Bitcoin is a "viable alternative" to banks. Per Edwards, this "firing at crypto" included the illegal closing down of Signature Bank, warning Coinbase about upcoming legal action from the SEC, CFTC suing Binance, etc.
When the crypto space is being attacked so hard, the analyst concludes, "the known relative value is highest."
@cz_binance trading against customers on his own exchange is seriously F’d up tho. Deserves to be held accountable for that— bstaz15 (@bstaz15) March 27, 2023