Binance and CZ Face Fraud Allegations In Brazil

A congress committee in Brazil has accused Binance of being a platform for a fraudulent pyramid scheme, while alleging that its CEO, Changpeng “CZ” Zhao, had illicit intentions when establishing multiple companies in the region.

“BINANCE was one of the companies used in the fraudulent financial pyramid scheme attributed to former waiter Glaidson Acácio dos Santos,” the statement declared.

Binance and CZ Accused of Negligent Dealings

In an extensive report, the committee alleges that Binance conducted transactions of approximately $791.7 million USD in Brazil without local regulators having any knowledge of its dealings.

“BINANCE moved BRL 40 billion in 2021 without Acesso, the regulated institution, having any control over who the customers were and whether the origin of the funds was legal”

Furthermore, it alleges that Binance CEO CZ established multiple companies within Brazil to evade compliance with local financial regulations.

“Changpeng Zhao, set up an opaque network of legal entities, all controlled directly or indirectly by Zhao, with no defined business purpose and with no other purpose than evasion of compliance with the law.”

The committee asserted that this absence of oversight resulted in a range of problems, including the utilization of the crypto exchange in a pyramid scheme.

Furthermore, it references a purported statement made by Binance’s chief compliance officer, stating the company’s desire to evade “regulation at all costs.”

It states that local authorities in Brazil lack the means to track its users:

“Controller Changpeng Zhao claims by the media that the company’s headquarters are wherever it is located at the time, reflecting a deliberate approach to avoid the costs of regulation borne by any legitimate company.”

Ongoing Legal Disputes Plague CZ and Binance

This coincides with recent allegations in the United States against CZ, as investors hold him responsible for the downfall of the crypto exchange FTX.

They declare that CZ’s tweets, issued before the exchange’s collapse, sowed doubts about its liquidity and financial standing, triggering a surge in withdrawals that ultimately precipitated the exchange’s collapse.

At the time of publication, CZ possesses roughly 8.6 million followers.

Meanwhile, CZ remains embroiled in an ongoing lawsuit filed by the SEC against both him and Binance.

In June, the SEC claimed that Binance and CZ falsely represented trading controls on the Binance.US platform, thereby misleading customers into maintaining their investments on the platform.