Cryptocurrency exchange Binance is under legal pressure in Canada and the Philippines, while U.S. prosecutors are demanding 36 months in prison for Changpeng Zhao.
Newsletter
Own this piece of crypto history
Cryptocurrency exchange Binance has been slapped with a new class-action lawsuit in Canada, with plaintiffs alleging that the firm has violated local securities laws.
Ontario’s Superior Court of Justice published a certification motion for a class-action lawsuit against Binance alleging that it sold crypto derivative products to retail investors without registration.
The lawsuit seeks damages and rescission of unlawful derivatives trades. The plaintiffs argued that tens of thousands of Canadian users of the Binance website invested in its cryptocurrency derivatives products.
The Philippines Securities and Exchange Commission (SEC) ordered both Google and Apple to remove the Binance app from their respective app stores for users in the Philippines.
Emilio Aquino, chair of the SEC, said that selling or offering unregistered securities to locals and operating as an “unregistered broker” violates the country’s securities regulations.
He said that by removing Binance applications from digital app marketplaces, these companies would help “prevent the further proliferation of its illegal activities in the country,” saying that otherwise, this could have “detrimental” effects on the local economy.
Meanwhile, Binance founder Changpeng “CZ” Zhao should serve 36 months in prison after pleading guilty to violating laws against money laundering, United States prosecutors said in a court filing.
“Given the magnitude of Zhao’s willful violation of U.S. law and its consequences, an above-guideline sentence of 36 months is warranted,” the prosecutors wrote in the filing to the U.S. District Court for the Western District of Washington.
“That sentence, together with the agreed $50 million fine, is sufficient but not greater than necessary to balance the relevant 18 U.S.C. § 3553(a) factors and achieve the goals of sentencing,” the filing added.
EU enacts Anti-Money Laundering crypto regulations
The European Parliament approved new regulations establishing formal due diligence obligations for cryptocurrency companies to combat money laundering. The new laws aim to improve “due diligence measures and identity checks” for customers, extending to entities such as crypto asset managers.
These entities must also report any suspicious activities to the authorities. This new legislation will impact crypto asset service providers, such as centralized crypto exchanges under the Markets in Crypto-Assets (MiCA) regulation and various other entities, including gambling services.
SEC reviews new guidelines for Bitcoin options trading
The United States Securities and Exchange Commission (SEC) has launched another round of consultations on a proposed rule change for trading options on Bitcoin (BTC) exchange-traded products (ETPs).
The securities regulator wants to understand better how listing Bitcoin options could affect the overall market, especially during times of stress. Part of the review will assess whether the exchanges’ current surveillance and enforcement mechanisms are adequate to handle the unique aspects of Bitcoin options.
The Commission previously sought comments on the rule change and included the feedback received in its filing. Most comments highlighted how options on Bitcoin ETPs would increase liquidity and improve market efficiency.
Chinese investors won’t be able to buy Hong Kong Bitcoin ETFs
The upcoming launch of spot Bitcoin and Ether (ETH) exchange-traded funds (ETF) in Hong Kong will not open up the market for investors in mainland China, according to Bloomberg data analyst Jack Wang.
Following Hong Kong’s approval of spot BTC and ETH ETFs, the three Chinese asset managers, including China Asset Management, Harvest Global Investments and Bosera, set the spot crypto ETFs through their Hong Kong subsidiaries.
Though the ETF issuers have close ties with mainland China, they will not be able to provide Bitcoin or Ether exposure to investors in that jurisdiction.