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12 Mar 2021

Binance under CFTC investigation over trading activities: report

Crypto exchange Binance is reportedly being investigated by the U.S. Commodity Futures Trading Commission (CFTC) over concerns surrounding whether it allowed U.S. investors on the platform.

According to a Bloomberg report on Friday, which cited anonymous sources, the CFTC is seeking to determine whether Binance has allowed residents in the U.S to buy and sell crypto derivatives products while not being registered under the government agency's oversight. 

BNB, the exchange's native token, dropped by 6% shortly after the news broke. 

Binance has not responded The Block's request for comment. But Binance co-founder and CEO Changpeng Zhao shrugged off the news on Twitter by saying it's all FUD (Fear, uncertainty, and doubt).

"It’s not a bull market without some FUD. Ignore FUD, keep BUIDLing," he tweeted after the news.

The news comes just a day after Binance announced it has hired Max Baucus, who served decades in the U.S. Senate and later as an ambassador to China, to help the firm navigate the U.S. regulatory landscape.

Binance said Thursday that Baucus will provide the exchange with policy guidance and act as a liaison between Binance and regulators.

From 2014 to 2017, Baucus also served as former President Barack Obama's ambassador to China.

This is also not the first time that the CFTC has probed a major crypto exchange.

In July 2019, the regulator launched an investigation into whether the derivatives market BitMEX allowed U.S. investors to trade crypto derivatives on its platform.

The investigation led to a formal indictment by the CFTC and the U.S. Department of Justice against BitMEX and its cofounders last year.

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