Brazilian authorities investigate Binance for allegedly helping clients bypass a stop order on cryptocurrency derivatives.
The cryptocurrency exchange Binance finds itself under investigation by Brazil’s Federal Prosecutor’s Office and Federal Police, following a report from Valor Econômico, a local newspaper. The report claims that Binance has been assisting its clients in evading a stop order on cryptocurrency derivatives investments imposed by the Brazilian Securities and Exchange Commission (SEC).
In 2020, the Brazilian SEC issued a stop order on Binance’s offerings of cryptocurrency derivatives due to their classification as securities under Brazilian law, regardless of the underlying assets. Despite this order, the SEC suspects that Binance may have continued to provide access to these derivatives for its clients.
Evidence and Binance’s Response to the Allegations
The SEC has presented the police with screenshots captured in August 2021, which allegedly demonstrate instructions for Brazilian users on changing their language settings to access the restricted Binance Futures section. Additionally, the SEC pointed out the abundance of Portuguese-language content with no restrictions or notices for Brazilian users.
In response to the accusations, Binance submitted a proposal for a commitment agreement in February, as reported by Valor Econômico’s public information. However, a decision on the proposal has not yet been reached. Binance has maintained that it does not offer derivatives in Brazil, complies with local regulations, and engages in ongoing dialogue with authorities to promote the growth of the crypto and blockchain industry in Brazil and globally.
Binance has encountered similar charges in other regions. For example, the exchange continued its operations in Ontario, Canada, even after notifying the Ontario Securities Commission of its intention to cease activities. Binance also admitted to working with US regulators in February to address compliance concerns. Moreover, in March, the US Commodity Futures Trading Commission filed a lawsuit against Binance over alleged trading violations.
Binance Activity in Brazil
Despite the ongoing investigation, Binance remains committed to its operations in Brazil, recently hosting a workshop at Insper, a leading educational institution.
Moreover, Binance has collaborated with the Brazilian Football Confederation to launch exclusive NFTs for Brazil’s national football league. These NFTs offer fans an enhanced experience by granting access to the upcoming Fanverse, exclusive content, and various discounts, reflecting Binance’s dedication to expanding its presence and services in the Brazilian market.
Binance and its CEO, Changpeng “CZ” Zhao, have demonstrated resilience in the face of regulatory scrutiny by adhering to their FUD avoidance strategy.