Brazilian Commission Advises Indictment of Binance CEO and Executives over Alleged Pyramid Schemes
Summary:
A Brazilian parliamentary commission has recommended indictments for Binance CEO Changpeng “CZ” Zhao and three other Binance executives over their involvement in alleged pyramid schemes in the country. A comprehensive report accuses the executives of fraudulent practices, operating without adequate permission and unauthorized securities trading. They have allegedly established an unclear network of legal entities with no exact business intent other than to avoid legal compliance. The commission has also advised the indictment of 45 other individuals linked to multiple cryptocurrency companies.
The CEO of Binance, Changpeng “CZ” Zhao and three other top Binance managers could face indictment following scrutiny by a Brazilian Parliamentary commission into alleged pyramid schemes within the country. A 500-page report authored by the commission, headed by deputy Ricardo Silva, accuses Zhao, alongside Brazil's Binance executives Daniel Mangabeira, Guilherme Haddad Nazar and Thiago Carvalho, of underhanded running of the business, lack of necessary trading permissions and unauthorized securities transactions. The commission alleged that Zhao and others have designed an unclear network of legal entities, controlled either directly or indirectly by Zhao, with no clear business intent apart from avoiding legal compliance.
In addition to targeting Binance's leaders, the report recommended the indictment of 45 other individuals with "strong evidence" of involvement in illegal activities, among them several associated with a variety of cryptocurrency companies – among them 123milhas travel company and the 18K Ronaldinho crypto scheme.
Silva suggests that Binance's operations in Brazil are riddled with suspicion, with the commission recommending a thorough inquiry into all of Binance's Brazil-based activities by the Federal Public Ministry. The key areas of focus will be tax evasion, money laundering and funding criminal organizations and terrorism. It was also suggested that Brazil's Securities and Exchange Commission initiate an investigation into the sale of derivatives product by Binance. The company has reportedly continued offering these, despite orders to stop, a repeated breach of market rules, according to the commission.
However, these recommendations are advisory in nature and are purely suggestions for local authorities to act or not. Binance reassures Cointelegraph of its commitment to cooperate with the commission and local forces in Brazil. Furthermore, Binance emphasized that it rejects baseless claims of unethical practices and attempts to make the company a scapegoat.
This comes as part of a larger clampdown on Binance by governing bodies in other parts of the world. Binance is currently confronting two independent lawsuits in the US, accusing the company and its upper management of contravening multiple financial regulations. The Australian financial regulator raided the Binance Australia offices in July, after the revocation of its derivatives license several months before. Binance also recently left Canada, prompted by new regulatory measures introduced in the country.
Published At
10/11/2023 1:35:05 AM
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