Indictment Looms: Binance CEO CZ In Brazilian Congress' Crosshairs

In a significant development, the recommendation of indicting Binance CEO Changpeng “CZ” Zhao and three other Binance executives has been put forth by a Brazilian congressional committee. This recommendation comes after a thorough investigation into financial pyramid schemes in Brazil.

On Oct 10, the committee made public their thorough final report, comprising a staggering 500 pages. This extensive document accuses Zhao, along with local Binance executives Daniel Mangabeira, Guilherme Haddad Nazar, and Thiago Carvalho, of involving themselves in fraudulent management practices. Furthermore, the report claims that they operated without proper authorization and engaged in securities trading without obtaining the necessary approvals.

However, the committee, led by Deputy Ricardo Silva, made a claim in their report. According to them, Binance Zhao and others established a network of legal entities that lacked transparency. These entities were allegedly under the direct or indirect control of Zhao and had no clear business purpose. Instead, they seemed solely intended to evade compliance with the law.

The report recommended the indictment of 45 other individuals. It cited “strong evidence” of their involvement in alleged criminal schemes. Additionally, many of these individuals were connected to various cryptocurrency companies, such as 123milhas and 18K Ronaldinho, among others.

**Numerous financial offenses are alleged against the CEO of Binance. Brazil’s Chamber of Deputies as a source**

Silva observed that Binance’s activities in Brazil raised suspicions, particularly due to the exchange’s noncompliance with regulations across various jurisdictions worldwide.

Binance Faces Double Probe In Brazil: Derivatives Sale & Alleged Illegal Activities

The committee recommended that the Federal Public Ministry should begin investigating all of Binance’s operations in Brazil. The focus will be on potential incidents of tax evasion, money laundering, and support for organized crime and terrorism.

Additionally, Brazil’s Securities and Exchange Commission (CVM) received advice to launch an investigation into Binance’s sale of derivative products. Despite being warned to discontinue offering these products, Binance persisted, which violated market regulations in multiple instances. Notably, the CVM is already investigating Binance for allegedly engaging in illegal activities related to derivative products within the country.

Moreover, the committee’s recommendations should be emphasized as not legally binding. It will ultimately be up to the local authorities, including the police and regulatory bodies, to decide whether further action will be taken against Binance and its executives.

Furthermore, Binance responded to these developments by openly encouraging constructive discussion regarding the challenges faced by the crypto industry. However, it firmly rejected any unfounded allegations of improper practices and vehemently opposed any attempts to target Binance without just cause.

However, this recommended indictment in Brazil is part of a broader international crackdown on Binance. In the United States, the exchange faces two separate lawsuits from local commodities and securities regulators. These lawsuits allege multiple violations of financial regulations.

Additionally, Binance’s offices in Australia were searched by the financial regulator in July after its derivatives license was stripped months earlier. Moreover, citing Canada’s new regulatory controls, Binance exited the Canadian market in May.

“The author’s views are for reference only and shall not constitute any investment advice. Please ensure you fully understand and assess the products and associated risks before purchasing.”