CFTC Looks for ‘Path Forward’ in Binance Battle

Binance has reportedly been in talks with federal regulators as it faces court action.

“We’ve been in continuing conversations with the business to describe what we understand is potentially problematic conduct and to give them an opportunity to explain that conduct and to help us find a path forward,” Kristen N. Johnson of the Commodity Futures Trading Commission (CFTC) told CNBC in an interview Tuesday (April 25).

“As of the moment, we can conclude that there is not an immediate path forward,” she added. “That doesn’t mean there couldn’t be one and hopefully there will be one.”

The report notes Johnson’s comments were a rate statement from the CFTC since it took Binance to court. Binance declined to comment when contacted by PYMNTS.

The CFTC sued Binance, its CEO and its former compliance chief in March, alleging the company solicited customers in the U.S. and allowed them to trade derivatives without having authorization to do so.

“For years, Binance knew they were violating CFTC rules, working actively to keep the money flowing and avoid compliance,” CFTC Chairman Rostin Behnam said in the release announcing the lawsuit. “This should be a warning to anyone in the digital asset world that the CFTC will not tolerate willful avoidance of U.S. law.”

Binance said in a statement to PYMNTS last month that it found the CFTC’s filing “unexpected and disappointing,” and noted it had been working with the commission for two years.

“Nevertheless, we intend to continue to collaborate with regulators in the U.S. and around the world,” the statement said. “The best path forward is to protect our users and to collaborate with regulators to develop a clear, thoughtful regulatory regime.”

The CFTC suit is one of several headaches facing Binance and its American affiliate, Binance.US. As PYMNTS reported earlier this month, the company found itself scrambling to find a banking partner after the collapse of Signature Bank and Silvergate Capital, two banks that catered to the cryptocurrency industry.

Binance.US had sent dollar deposits to Signature or Silvergate until March, when Silvergate voluntarily liquidated itself, and Signature was taken over by regulators in one the largest bank failures in U.S. history. In both cases, it left crypto companies seeking new banking partners.

It’s not just Binance, however. As PYMNTS observed earlier this month, crypto firms have become “kryptonite” for the banking sector.

“A lot has changed over the course of the past year, none of it very good for the digital asset industry,” PYMNTS wrote.

“Now, the sector increasingly finds itself without the critical banking partners necessary to work with fiat currency and accept dollar deposits in return for services or in exchange for tokens.”