Binance is facing a police investigation in Brazil over its derivatives offerings, as authorities suspect the crypto exchange of violating financial regulations and disregarding a stop order.
Binance Denies Allegations of Derivatives Offerings in Brazil
The Brazilian Federal Public Prosecutor’s Office and Federal Police are investigating allegations that Binance engaged in illegal financial activity. After receiving information that Binance may have continued offering cryptocurrency derivatives to Brazilian customers after receiving a “stop order” from the State of So Paulo Attorney General, the Securities and Exchange Commission (CVM), they have reportedly opened an investigation, as reported by O Globo.
The CVM allegedly provided the Federal Police with evidence, including screenshots of conversations with Binance support employees, to back up its claim. A member of staff reportedly assured a Brazilian user in one of these conversations that the user could still gain access to derivatives offerings by switching the app’s or website’s language.
The cryptocurrency exchange Binance has issued a denial and declared it “does not comment on ongoing investigations.” The exchange also reaffirmed that derivatives are not available in Brazil. Binance is in a precarious position since the CVM’s claims might result in a hefty punishment or perhaps the suspension of its activities in Brazil, and the evidence against it is piling up.
Binance has been investigated by regulators before. The UK Financial Conduct Authority (FCA) issued a warning to the exchange in March 2021, saying that it was not authorized to conduct business in the UK. The Financial Conduct Authority (FCA) later issued a consumer warning against Binance due to regulatory and service quality issues.
Binance Faces Regulatory Scrutiny in Brazil
The Brazilian government has taken a dim view of Binance. No specifics about the issue have been disclosed, but the Federal Public Ministry has apparently acknowledged that an investigation is underway.
Binance has responded by saying that it is in constant communication with Brazilian and international regulators of the cryptocurrency and blockchain industries. However, when asked about active investigations, the Federal Police have remained silent.
Binance ceased providing derivatives to Brazilian customers in August 2021, according to a 2022 report from the CVM. The report also mentioned that all references to these currencies had been removed from the Binance Brazil website.
Final Thoughts
For now, it remains unclear what the outcome of the investigation will be or its impact on Binance’s operations in Brazil and beyond. However, the case highlights the ongoing challenges that cryptocurrency companies face as they navigate a rapidly evolving regulatory landscape worldwide.