A Brazilian congressional committee has made a significant recommendation for local law enforcement to pursue the indictment of Binance CEO Changpeng "CZ" Zhao, along with three other Binance executives. This recommendation follows an extensive probe into financial pyramid schemes operating in Brazil.
The committee released a comprehensive 500-page report on October 10, accusing Zhao and the local Binance executives, including Daniel Mangabeira, Guilherme Haddad Nazar, and Thiago Carvalho, of engaging in fraudulent management practices. The accusations include operating without sufficient authorization and offering securities trading without the necessary permissions.
In the report, the committee, led by Deputy Ricardo Silva, alleged that Binance, Zhao, and the 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 also called for the indictment of 45 other individuals, citing "strong evidence" of their alleged involvement in criminal schemes. These individuals were linked to various cryptocurrency companies, including the travel firm 123milhas and the crypto scheme 18K Ronaldinho, among others.
Silva noted that with Binance facing regulatory compliance issues in multiple jurisdictions, the operations of Binance in Brazil were viewed with suspicion.
The committee has recommended that the Federal Public Ministry launch an investigation into all of Binance's operations in Brazil, with a particular focus on tax evasion, money laundering, and the financing of organized crime and terrorism.
Additionally, the committee has called for Brazil's Securities and Exchange Commission (CVM) to investigate Binance's sale of derivative products. Despite being told to cease trading derivatives products, Binance continued to offer them, constituting a "repeated violation" of market regulations. Binance is already under investigation by the CVM for allegedly offering derivative products in the country without proper authorization.
It's important to note that the committee's recommendations are not legally binding, and it will be up to the police and other regulatory bodies to decide whether to take further action.
In response to the developments, Binance expressed its commitment to collaborating with the committee and local law enforcement in Brazil. Binance welcomed constructive debate but strongly rejected baseless accusations of bad practices and attempts to make the exchange a target.
This regulatory scrutiny of Binance in Brazil is part of a broader crackdown on the exchange by authorities in various countries, including the United States and Australia, which have raised concerns about regulatory compliance and financial practices.