Brazil Committee Recommends Indicting Binance Officials, CZ

Indictment photo with brazil land and flag and binance logo below it.

A congressional committee in Brazil has concluded that four Binance officials, among them company CEO Changpeng Zhao (CZ), should be indicted. The suggestion follows a probe targeting crypto platforms suspected of operating pyramid schemes and can potentially affect the global crypto company’s plans in Brazil and add to its legal challenges.

Parliamentary Committee Suggests Indictment of Binance CEO, Senior Brazil Staff

Binance, the world’s largest cryptocurrency exchange by daily trading volume, may face another legal battle if Brazilian authorities accept the recommendation of a committee at the National Congress to indict some of its leaders, including founder and chief executive Changpeng Zhao.

The committee, which had been investigating crypto-related Ponzi schemes, has accused CZ and three senior local Binance employees of fraudulent management, offering or trading securities without prior authorization as well as operating a financial institution again without authorization, Bloomberg reported.

Comprised of 28 members of the Chamber of Deputies, the lower house of parliament, the committee also suggested that Brazil’s Federal Public Prosecutor’s Office should examine the tax compliance of Binance’s local unit and a separate arm, Binance Capital Management.

Reacting to the news, the exchange said in a statement that it went to “great lengths” to actively collaborate with the committee which wrote in a report accompanying its recommendations that Binance is “surrounded by suspicion” in Brazil.

Binance also emphasized it “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.”

The Brazilian lawmakers also recommended that the country’s securities regulator, Comissão de Valores Mobiliários (CVM), investigate Binance for “repeated violation of the securities market rules.” The exchange has been accused of continuing to sell derivatives despite having been ordered to stop.

Besides a CVM probe against its local branch, which may result in more fines and penalties, Binance’s proposal to acquire a Brazilian securities brokerage, announced in early 2022, has not been approved yet by the country’s regulatory bodies and central bank.

The parliamentary committee’s recommendation for indictment may turn into another setback for Binance this year. The crypto behemoth has been dragged into legal battles and other clashes with financial regulators in the U.S., Europe, and elsewhere.