In a significant development, a Brazilian congressional committee has recommended the indictment of Binance CEO Changpeng “CZ” Zhao and three other Binance executives. The recommendation follows an extensive probe into financial pyramid schemes in Brazil and was detailed in a 500-page final report released on October 10.
The committee, led by Deputy Ricardo Silva, accuses Zhao and local Binance executives Daniel Mangabeira, Guilherme Haddad Nazar, and Thiago Carvalho of fraudulent management practices. The report alleges that they operated without sufficient authorization and engaged in securities trading without proper authorization.
In a damning statement, the committee claimed that Binance, Zhao, and others had “set up an opaque network of legal entities, all controlled directly or indirectly by Zhao, without defined business purpose and with no other purpose than evading compliance with the law.”
The report further recommended the indictment of 45 other individuals, citing “strong evidence” of their alleged participation in criminal schemes. These individuals were linked to various crypto companies, including the travel firm 123milhas and the crypto scheme 18K Ronaldinho.
Deputy Ricardo Silva highlighted the international scrutiny surrounding Binance, stating that in Brazil, the operations of Binance were “surrounded by suspicion.” The committee urged the Federal Public Ministry to launch an investigation into all of Binance’s Brazil-based operations, focusing specifically on potential offenses such as tax evasion, money laundering, and the financing of organized crime and terrorism.
Additionally, the committee called for an investigation by Brazil’s Securities and Exchange Commission (CVM) into Binance’s sale of derivatives products. Despite allegedly being instructed to cease trading in derivatives products, Binance continued to offer them, constituting what the committee termed a “repeated violation” of market regulations. Notably, Binance is already under investigation by the CVM for the alleged illegal offering of derivative products in the country.
It’s crucial to note that the committee’s recommendations are not legally binding; they serve as suggestions to local authorities. The decision on whether to move forward with further action lies with the police and other regulatory bodies.
As the crypto industry faces increased scrutiny globally, this development adds to the challenges faced by one of the world’s largest cryptocurrency exchanges.
