As a seasoned analyst with over two decades of experience in global financial markets under my belt, I’ve witnessed numerous regulatory battles between tech-driven disruptors and traditional authorities. In the case of Binance, it seems to be no exception. The Brazilian chapter of this ongoing saga is an interesting one, marked by a series of violations, workarounds, and eventual settlements.
Through Binance‘s Brazilian affiliate, B Fintech Serviços de Tecnologia Ltda, they have consented to a payment of approximately $1.7 million to the relevant authorities.
The agreement stemmed from a dispute with the Brazilian securities commission, the Comissão de Valores Mobiliários (CVM), due to accusations of infractions regarding local derivative regulations. The CVM’s examination of Binance in Brazil began as early as 2020, when the platform was initially instructed to discontinue offering derivatives within the country.
As per Brazilian legislation, derivative contracts fall under the category of securities and need special regulatory permission for trading. Nevertheless, Binance, functioning via B Fintech, lacked this approval. Consequently, the Securities and Exchange Commission of Brazil (CVM) decided to intervene.
Although Binance initially complied with regulations by deleting the Binance Futures service from its Brazilian site, there are reports that they found ways around this restriction, like granting access to users who switched their website language setting to Portuguese.
After partially complying with Binance’s regulations, the Brazilian Securities and Exchange Commission (CVM) closed its initial investigation. However, in December 2022, the commission initiated a second administrative proceeding against Binance due to the workarounds it offered to its clients. As part of the settlement agreement for this second case, Binance suggested a fine of approximately $370,000 in August 2023. Unfortunately, the CVM declined this penalty.
The initial plan was considered inadequate by the agency, considering the gravity of the accusations. Importantly, it was discovered that the original conditions failed to properly tackle the legal infractions.
Following more discussions, Binance presented an amended plan in February, incorporating a payment of $1.7 million. Upon careful examination of this updated plan by the CVM, it was deemed acceptable both legally and practically, resulting in the approval of the agreement being reached.
Binance’s global regulatory issues
Worldwide, Binance is encountering growing scrutiny from regulators. In the U.S., the Commodity Futures Trading Commission has alleged that Binance failed to register its derivative products, a concern also expressed regarding their operations in Brazil, mirroring past issues.
The Nigerian authorities have detained officials from Binance, alleging that the cryptocurrency exchange disregarded anti-money laundering rules and aggravated the devaluation of their currency. Furthermore, Binance has faced criticism from European regulatory bodies, causing them to withdraw from certain markets, like the Netherlands.
In Brazil, Binance is working to establish its business securely by purchasing locally based companies that strictly adhere to Brazilian laws and regulations. One such purchase was Sim;paul Investimentos, a licensed brokerage firm overseen by both the Brazilian Securities and Exchange Commission (CVM) and the Central Bank of Brazil.
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2024-08-15 13:11