Binance and CEO Changpeng Zhao face potential indictment charges in Brazil for fraudulent management

Binance is having a tough time around the globe with the exchange exiting multiple countries, including the likes of Russia, Canada, Germany and more. The world’s biggest exchange is now at the risk of being indicted in Brazil, too, should the authorities decide to pursue the accusations.

Binance and CEO accused of violating laws

Binance has been accused of offering or trading in securities without prior authorization, as well as operating a financial institution without authorization. These accusations against the exchange come from a Brazilian congressional committee that is also pursuing charges against the CEO of the exchange.

According to the reports, the founder of Binance, Changpeng Zhao, along with three other executives, have been accused of fraudulent management as well. While the committee does not hold the power to exact charges against either the exchange or the executives, it can make a suggestion to the local authorities as it did. The decision to indict Binance and its executives now rests in the hands of Brazilian police.

Binance, on the other hand, has stated that the exchange has attempted its best to collaborate with the congressional committee but failed in doing so. In a statement to Binance, the exchange noted,

“[Binance] strongly rejects any attempts to make Binance a target or even expose its users and employees with allegations of bad practices without any proof, amid competitive disputes given the company’s leadership position in Brazil and in the world.”

Made up of 28 members, the committee is also attempting to push the Federal Public Prosecutor’s Office to look into the compliance of Binance’s local unit and a separate arm, Binance Capital Management.

Regulatory trouble for Binance in Brazil

In addition to the aforementioned indictments, the congressional committee formed of lower house representatives is also urging the regulatory authorities to jump on the bandwagon. In a suggestion to CVM, Brazil’s securities regulator, the committee is calling for an investigation of Binance’s sale of derivatives. Per the committee, Binance continued the sale despite receiving a stop order.

If CVM decides to pursue charges, it would be adding to the ongoing probe against Binance’s Brazilian operations regarding the sale of derivatives. 

Whether or not Binance would exit from the country is uncertain at the moment. However, if the exchange decides to do so, it would mark the fourth major exit this year, following Russia, Canada and Germany.