Binance CEO CZ under fire in Brazil – here’s why

• Binance has already been reprimanded over its derivatives trading services.
• The committee also recommended a probe into the tax compliance of the exchange’s local unit.

Binance’s [BNB] predicament appeared to be far from over, as the world’s largest crypto exchange faced regulatory heat in yet another country.

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Brazil trains its guns on Binance

A Brazilian congressional committee called for indictment of four top Binance executives, including CEO, Changpeng Zhao (CZ), on serious allegations ranging from fraudulent management to illegal sale of securities, per a report by Bloomberg.

The committee, which was made up of 28 legislators from the lower house of the National Congress of Brazil, recommended a probe into the tax compliance of the exchange’s Brazilian arm and a separate unit called Binance Capital Management.

The representatives also urged Brazil’s securities regulator Comissão de Valores Mobiliários (CVM) to investigate Binance’s derivatives business. They claimed that despite being warned to halt, the exchange continued to offer such services.

In 2020, Binance was asked to suspend derivatives trading services in the country because it lacked necessary approval to carry out such operations. For the uninitiated, Brazil treats all derivatives products as securities, irrespective of the underlying asset.

The recommendations were accompanied by some strong words from the legislator Ricardo Silva, who led the committee. He remarked that Binance’s operations were “surrounded by suspicion.”

Note that the recommendations were not legally binding, and it was up to local law enforcement to decide whether to pursue the investigation.

A nightmarish 2023

Regardless, the move compounded Binance’s troubles, which has been at the receiving end of unrelenting regulatory salvos in 2023.

Much like Brazil, the crypto behemoth grappled with lawsuits from U.S. Securities and Exchange Commission (SEC) and securities regulator Commodity Futures Trading Commission (CFTC) owing to lack of compliance in its spot and derivatives offerings.

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But the problems haven’t ended there. Major markets like Canada, the UK, Australia, Netherlands, and Germany have targeted the exchange over irregularities in recent months.

At the time of writing, the exchange token BNB exchanged hands at $207, up marginally, per CoinMarketCap. On a year-to-date (YTD) basis, the fourth-largest crypto lost nearly 16% of its value.