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Matt Levine

The CFTC Comes for Binance

Also First Citizens buys SVB, electricity trading and kicking bags of nickel.

A decent rule of thumb is that all cryptocurrency exchanges are doing crimes, and if you’re lucky your exchange is doing only process crimes. Today the US Commodity Futures Trading Commission sued Binance Holdings Ltd., Changpeng Zhao’s big crypto derivatives exchange, for letting Americans trade crypto derivatives. There are no accusations that Binance is stealing customer money, or even taking big risks with it, which makes Binance look better than some other crypto exchanges I could name. There are … look, there are not no accusations that Binance is laundering money for terrorists or secretly trading against its customers, but there are relatively few accusations like that; again, as crypto exchanges go, that’s pretty good.

No, the CFTC’s case is mainly about letting US customers trade crypto derivatives. It is illegal to run a crypto derivatives exchange in the US without registering it with the CFTC, and it’s not exactly easy to do that either; if you have a crypto derivatives exchange abroad but have not registered it in the US, it is illegal to let US customers trade on it. So the basic rule is that US customers can’t trade crypto derivatives, and big international crypto derivatives exchanges (Binance, FTX before it blew up) sometimes have US-only platforms (Binance US, that let US customers trade a limited set of products, but not most derivatives.