Brazilian Congress Recommends Binance CEO and Three Other Executives Indictment

A Brazilian congressional committee has issued a recommendation for the indictment of four senior executives of Binance, including the company’s CEO and founder, Changpeng Zhao. The committee’s investigation focused on crypto-related Ponzi schemes in Brazil, and while it has the authority to make suggestions, the final decision to proceed with indictments lies with Brazilian law enforcement, according to a report by Bloomberg.

Brazilian Congress Recommends Binance CEO and Three Other Executives Indictment

Committee has accused Changpeng Zhao and three local Binance employees of several charges, including fraudulent management. unauthorized offering or trading of securities, and operating a financial institution without the necessary authorization.

The report also emphasized the cloud of suspicion surrounding Binance in Brazil, as noted in a report prepared by lawmaker Ricardo Silva.

Binance responded to the allegations in an email to Bloomberg, stating that they had made serious efforts to actively cooperate with the committee. They strongly rejected any attempts to target Binance or subject its users and employees to baseless allegations.

In addition to the recommendation made by the committee, which consists of 28 lower house representatives. it has requested the Federal Public Prosecutor’s Office to investigate the tax compliance of Binance’s local unit and Binance Capital Management, a separate entity.

Furthermore, the committee advised Brazil’s securities regulator, known as CVM, to investigate Binance’s sale of derivatives, which allegedly violated a stop order. The committee’s final report characterized these ongoing transactions as a repeated breach of securities market regulations.

This is not the first time that Binance’s Brazil unit has encountered regulatory challenges. The unit is already facing a CVM probe related to its sale of derivatives and had its proposed settlement offer, worth 2 million reais, rejected by the securities regulator in August. As a result, further penalties and fines are anticipated for Binance’s local unit.

Adding to Binance’s challenges in Brazil is the uncertain status of its proposed acquisition of Brazilian securities brokerage Sim;paul Investimentos, announced in March 2022. Binance had indicated that the approval of regulatory authorities, including the Central Bank of Brazil, would be required for the transaction. However, the necessary approvals are yet to be obtained.

Binance Faces Global Regulatory Scrutiny

While grappling with the Brazilian regulatory landscape, Binance is also facing heightened scrutiny from regulators worldwide. In the United States, the exchange is dealing with legal challenges from the Commodity and Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC), both of which have filed lawsuits against the exchange and its CEO.

Back in June, the SEC sued Binance and its CEO for their “blatant disregard of the federal securities laws,” revealing 13 charges against the platform, including operating an unregistered exchange. The agency accused Binance of breaking the law by offering unregistered securities to the general public, including its BNB token and BUSD stablecoin.

Likewise, the CFTC lawsuit accuses Binance of deliberately aiding U.S. customers in evading restrictions on crypto trading imposed by its American affiliate. There have also been rumors about a potential indictment by the U.S. Department of Justice against Zhao and Binance for possible violations of anti-money laundering laws.