A Brazilian congressional committee has advocated for local authorities to indict Binance CEO, Changpeng “CZ” Zhao, along with three additional Binance executives, subsequent to an inquiry into financial pyramid frauds within Brazil.
On October 10, the committee disclosed a comprehensive 500-page final report, leveling accusations against Zhao and Binance Brazil executives — Daniel Mangabeira, Guilherme Haddad Nazar, and Thiago Carvalho — of deceitful management activities, operation without adequate authorization, and unauthorized securities trading.
Under the leadership of Deputy Ricardo Silva, the committee alleged that Binance and Zhao, among others, “constructed an enigmatic network of legal entities, directly or indirectly overseen by Zhao, lacking a defined business intent and solely aimed at circumventing legal compliance.”
Moreover, the report proposed indicting an additional 45 individuals, citing “robust evidence” of their purported involvement in unlawful schemes, with the accused being associated with various cryptocurrency firms, including travel company 123milhas and the cryptocurrency venture 18K Ronaldinho, among others. Silva noted that Binance’s operations in Brazil were “shrouded in skepticism,” in light of its accusations of regulatory non-adherence in several other regions.
The committee urged the Federal Public Ministry to initiate an inquiry into all of Binance’s operations located in Brazil, particularly emphasizing tax evasion, money laundering, and the financial backing of organized crime and terrorism.
Furthermore, the committee called upon Brazil’s Securities and Exchange Commission (CVM) to initiate an investigation into Binance’s derivatives products sales.
Despite being directed to halt derivatives trading, the committee alleged that Binance persisted in offering them, constituting a “chronic infringement” of market rules. Binance is presently being investigated by the CVM for purportedly unlawfully offering derivative products in the nation.
Although the committee’s recommendations hold no legal weight and serve as advice to local authorities, it is within the purview of the police and other regulatory agencies to determine whether further action will be undertaken.
Binance, in a statement to Cointelegraph, conveyed its ongoing commitment to cooperation with both the committee and local Brazilian law enforcement. While Binance welcomed constructive discussions regarding the challenges confronting the crypto sector, it “emphatically refutes exposing our users or employees to unfounded accusations of malpractice and attempts to paint Binance as a target.”
This regulatory pressure on Binance occurs amidst a wider, international crackdown on the exchange by various authorities.
In the United States, Binance is contending with two distinct lawsuits from local commodities and securities regulatory bodies, alleging that the exchange and its high-ranking executives violated a multitude of financial regulations.
Earlier, in July, Australia’s financial regulator executed a search of Binance Australia’s offices, following the revocation of its derivatives license a few months before. In May, Binance withdrew from Canada, pointing to the nation’s newly implemented regulatory constraints.
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