Brazil Legal Avalanche: Binance CEO and Executives in Crosshairs Over Alleged Pyramid Scheme
A Brazilian congressional committee has recommended the potential indictment of Binance CEO Changpeng “CZ” Zhao and three other Binance executives after conducting an investigation into financial pyramid schemes in Brazil.
The 500-page final report, released on October 10, accuses Zhao and the local Binance executives of fraudulent management practices, unauthorized operations, and conducting unapproved securities trading.
The committee, led by Deputy Ricardo Silva, alleges that Binance, Zhao, and others established a complex network of legal entities, primarily controlled by Zhao, seemingly designed to evade legal compliance rather than for any legitimate business purpose.
Furthermore, the report suggests the indictment of 45 other individuals with evidence of involvement in criminal schemes, many associated with various cryptocurrency companies, including the travel firm 123milhas and the crypto scheme 18K Ronaldinho.
The committee recommends that the Federal Public Ministry investigate all Binance operations in Brazil, focusing on potential tax evasion, money laundering, and the financing of organized crime and terrorism. Additionally, it advises the Brazil Securities and Exchange Commission (CVM) to look into Binance’s sale of derivative products.
It’s crucial to note that these recommendations from the committee are not legally binding but serve as suggestions to local authorities, who will determine whether further action is warranted.
According to Cointelegraph, Binance has expressed its commitment to collaborating with the committee and local law enforcement in Brazil, emphasizing its willingness to engage in constructive discussions about industry challenges while strongly refuting baseless accusations and efforts to target the company.
This development in Brazil is part of a broader trend of increasing regulatory scrutiny faced by Binance in various countries.
In the United States, Binance is confronting two separate lawsuits from local commodities and securities regulators, alleging violations of financial regulations.
Australia’s financial regulator also conducted a search of Binance Australia’s offices in July after stripping its derivatives license earlier.
In May, Binance made the decision to exit the Canadian market, citing the country’s evolving regulatory landscape.
