A congressional committee has recommended that Changpeng Zhao and three local Binance executives be indicted for fraud and other financial crimes.
A congressional committee in Brazil has made a strong recommendation to local law enforcement, urging them to consider indicting Changpeng “CZ” Zhao, the CEO of Binance, and three other high-ranking Binance executives. This recommendation follows an extensive investigation into financial pyramid schemes operating within Brazil.
On the 10th of October, the committee unveiled a comprehensive 500-page final report that levels serious allegations against Zhao and the local Binance executives, specifically Daniel Mangabeira, Guilherme Haddad Nazar, and Thiago Carvalho. The accusations revolve around fraudulent management practices, conducting business without the necessary authorization, and engaging in securities trading without the requisite approvals.
Within the report, the committee, led by Deputy Ricardo Silva, claims that Binance, under the influence of Zhao and others, has orchestrated a network of legal entities with a marked lack of transparency. These entities are found to be directly or indirectly controlled by Zhao and appear to lack a clear business purpose, except to circumvent legal compliance.
The report further advocates for the indictment of 45 additional individuals, citing “strong evidence” of their involvement in alleged criminal schemes. The individuals named in the report have connections to various cryptocurrency companies, including 123milhas, a travel firm, and the cryptocurrency scheme 18K Ronaldinho, among others.
In its recommendations, the committee urges the Federal Public Ministry to initiate a comprehensive investigation into all of Binance’s operations in Brazil. This investigation will have a particular focus on matters related to tax evasion, money laundering, and potential links to organized crime and terrorism financing.
Additionally, the committee suggests that Brazil’s Securities and Exchange Commission (CVM) conduct an inquiry into Binance’s offerings of derivative products. The committee highlights that, despite being instructed to discontinue derivative product trading, Binance persisted in offering them, which the committee views as a “repeated violation” of market regulations. It’s important to note that Binance is already under investigation by the CVM for allegedly conducting illegal derivative product transactions within the country.
It’s crucial to understand that the recommendations put forth by the committee do not carry legal obligations. The decision to take further action lies with the local authorities, including the police and other regulatory bodies.
Binance, in response, has informed Cointelegraph that it is “fully committed” to collaborating with the committee and local law enforcement in Brazil. While welcoming constructive discussions about the challenges faced by the cryptocurrency industry, Binance strongly opposes unfounded accusations of wrongdoing against its users or employees, as well as any attempts to make Binance a target.
This regulatory scrutiny against Binance is part of a larger trend of intensified oversight on the exchange by authorities in various parts of the world. In the United States, Binance is currently facing two separate lawsuits from local commodities and securities regulators, alleging violations of multiple financial regulations. In July, the Australian financial regulator conducted a search of Binance Australia’s offices, a move that followed the earlier revocation of its derivatives license. Moreover, in May, Binance decided to exit the Canadian market, citing the country’s newly implemented regulatory controls.
