The Banning of Binance.

that could be a situation where there

would be a permanent ban for both

trading and registration in the U.S by

the USC FDC because this was an ongoing

fraud going back to 2019 an ongoing

violation of the commodity exchange act

they complaint it's pretty clear that

this was to use your word orchestrated

and there was an intent to evade U.S law

and there are Communications that are

documented in the complaint as well well

binance is getting sued and in this

segment we're going to go through the

lawsuit and response from CZ himself

I've also covered this Finance Saga for

quite a while with just two days ago

breaking down a video from CNBC where

CNBC alleges that binance basically

helps people skirt Chinese laws to make

sure that Chinese individuals can

actually invest in crypto by skirting

the rules or purposefully closing their

eyes to regulations to let people sign

up for binance in China even though

they're not allowed to do that even

going as far as basically allowing

people to upload Chinese passports and

identifying documents but saying they're

from Taiwan even though their documents

clearly safe they're from China but then

purposely ignoring those documents that

was a CNBC cover just a couple days ago

going back a year ago we have a

Bloomberg story talking about how CZ

purposefully lives in Dubai and refuses

to come to the United States potentially

because he's afraid of getting arrested

stays in Dubai because they don't have

extradition treaties most of his

companies are based out of uh either uh

well foreign countries there are over

150 different entities but many of them

based in the Cayman Islands very

difficult to actually figure out which

company or entity to sue if you're an

individual trying to Sue binance and so

there's been a lot of coverage obviously

around binance and every time we cover

binance there are an army of either the

crypto enthusiasts or Bots who refuse to

provide any kind of data data or fax and

just provide their opinion of why they

think it's wrong the government or or

entities might potentially be sued uh

regarding crypto now something to keep

in mind as well on top of this sort of

just summarize some of the things we've

recently talked about we also know that

now up to about 80 percent of Bitcoin

trading volume takes place on binance a

lot of that may be due to the fact that

binance removed all trading fees are on

bitcoin which was a smart thing to do

right around the collapse of other

brokerages brilliant move but it also

makes you question that this is a

company that's removed a proof of

reserves audits which could have been

the same bucket of a billion bucks to

multiply and Reserve out multiple

different stable coins which we don't

actually think are fully backed at uh

binance because we've never seen a

complete audit over at binance so I

personally find it very difficult to

trust any part of binance but let's take

a look at now cz's response to the

commodity future trading commission's

lawsuit against them we're going to

start with cz's response then we're

going to dive into the actual lawsuit so

today the commodity future trading

commission filed an unexpected and

disappointing civil complaint despite

our working cooperatively with the cftc

for over two years upon initial review

the complaint seems to be an incomplete

uh basically list of facts binance has

developed best-in-class technology to

ensure compliance binance is the first

non-us exchange to implement mandatory

know your customer programs and remains

to high and has high standards in

anti-money laundering and know your

customers we block U.S users IP

addresses VPN endpoints mobile carrier

device fingerprints bank deposit and

withdrawals basically they talk about

all these fantastic things that they do

to make sure that they cooperate with

the law we are aware of no other company

using systems more comprehensive and

effective than in binance and basically

a full response will come in the future

this is cz's response to a massive

lawsuit by the cftc seeking to

permanently ban binance from being able

to operate in the United States and

there's some massive Quant funds that

operate using binance in the United

States that's what's important to

remember is there are massive trading

firms trading billions of dollars in the

United States with binance as the

platform and they're using algorithms

that they tweak every single day just a

little bit to make sure that they can

dump and pump on normies as they wish so

if you're trading less than a thousand

BTC you're almost irrelevant

unfortunately in the world of the Quant

funds using binance to manipulate a

trade markets now what is the cftc's

complaint well first the cftc alleges

fraud against uh binance and suggests

that binance much like FTX did it could

potentially be using customer deposits

in ways that are not appropriate such as

potentially investing them but let's go

through the actual lawsuit here and

let's look at some of the highlights

because there are some pretty juicy

pieces in the actual lawsuit let's start

with some of them right over here so

we're going to go to page 32 of the

lawsuit here and take a look at this

there's the chief compliance officer Lim

that you're going to see referenced and

then you're going to see a Zao which is

a CZ the CEO of binance whom according

to the cftc basically controls all of

binance and listen to this Finance

intentionally trying to hide the scope

of its compliance program

ineffectiveness from its business

partners for example around October of

2020 binance underwent a compliance

audit to satisfy a request from paxos

but according to the chief compliance

officer Lim binance purposely in engaged

a compliance auditor that would quote

just do a half-assed individual sub

audit on geofencing to buy us more time

oh here's my I'm getting I'm getting hit

by the the Chinese uh who really like

binance there we go all right fixed as

part of the audit the binance employee

who held the title money laundering

reporting officer lamented that she

quote needed to write a fake mlro report

to the binance board of directors

binance didn't even have a board of

directors Lim the chief compliance

officer was aware of that and replied

and says yes it's fine I can get

management to sign off on that fake

report the chief compliance officer

themselves literally sent the following

message I has no confidence in our

geofencing

and then they're literally caught joking

about illegal terrorist organizations

like Hamas trading sums of money that

might not even be enough to buy AKs with

but they're joking about how we

basically see crime happening on the

binance platform but they just keep

their eyes closed to that activity in

fact when they would talk about quote

we're very closely associated with

illegal activity or rather recent

transactions by a certain uh by a

certain customer were quote very closely

associated with illicit activity and

over five million dollars USD worth of

his transactions were indirectly sourced

from questionable sources when an

employee asked about this the chief

compliance officer responded with the

following

can let him know to be careful with his

flow of funds especially from darknet

like Hydra he can come back with a new

account but the current one has to go

it's tainted you literally have fraud

documented inside binance now we know

right now these are all just allegations

but the cftc is alleging via these chats

that they got from employees even though

they use signal and most of the chats

get deleted you literally have fraud

from within binance about how they know

people are illegally operating within

within binance I'm just like I just have

them use a different account so they

know about it we don't need to be strict

because CD doesn't like off-boarding

off-boarding is a reference to people

leaving and going to a different

platform or whatever

here the chief compliance officer says

hey I know it's a pain in the butt but

my duty is to constantly remind you and

they basically talk about sanctions and

the potential International risk of

getting caught if they're doing uh Shady

things basically and an investigation

could blow up big on the world stage and

uh basically they acknowledge these

problems and what they do is they just

take out any references to the United

States uh on their uh uh on their

platform so that way they could

potentially skirt uh regulations even

more so here's just how they use vpns

much like the CNBC story broke to try to

encourage people to get around uh the

know your customer rules but take a look

at this

binance's revenues reportedly rely on

datatron from binance's internal

databases monthly reports from revenue

from 2020 and they have more from 2021

as well basically show that a certain

number of customers were from locations

labeled

u-n-k-w-n which is supposed to imply

unknown but actually listen to this

the same month rival digital asset

exchanges were sued by the cftc Zao

direct so the CEO directed binance

Personnel to replace U.S values in data

fields with the value unknown as a

result binance says October monthly

revenue reports identified 2.83 million

customers in locations known as unknown

while omitting any reference to the

United States

in other words listen to this it's

widely understood by binance Personnel

that unknown is a code word for the

United States dang it uh let me fix that

really quick

there we go uh and it's basically

purposefully used to skirt the fact that

they have exposure there's a stupid

cable here they basically use a a

unknown to purposefully skirt the fact

that they have customers in the United

States they say quote everyone in the

future will see uh will not see our U.S

data except for very few people instead

we'll just use the word unknown every

time the US is referenced that's on page

46 of the complaint here from the cftc

so it's very obvious that they know what

they're doing is wrong and they're not

providing uh the reporting that they

should to U.S authorities in fact the

cftc alleges that binance has never once

submitted a suspicious activities report

which is something if you actually had

good compliance procedures or cared you

would do but we already know that

binance says they have compliance and

they don't care about actually following

through with their compliance they

themselves don't care about their

compliance now some people say hey who

really cares like let crypto be crypto

and decentralized but the whole point of

having regulation is to make sure that

people's deposits aren't affected and

that stable coins that are uh actually

backed by a dollar are actually backed

like a dollar uh or backed by a dollar

but we don't know that that's true so

it's a really dangerous platform to be

on you know I understand some people

internationally have to use it because

they don't have another choice and they

want to get their money into crypto but

golly not your keys not your crypto here

I'd have my money off of binance for

sure I'd have my money off of any

exchange if I was in crypto which I'm

not I think it's too manipulated by

stuff like this look at this uh here

there's a whole section about how

binance employees basically talk about

how they have to keep an eye on

gamifying crypto trading and they say

the following good Lord I'd never have

this many problems it's just as soon as

I talk about a crypto video

uh right now most of the gamification

trading are based on some complex

derivative financial instruments such as

binary options exotic options or

Perpetual swaps the reason why we did

the Futures battle is we wanted to lower

the battle or lower the barrier of

complex Financial products so here's

basically where binance is talking about

uh this this gaming feature they have

called Futures a battle where you can

like fight people on a one minute battle

period in terms of which direction

crypto is going to go on potentially as

much as

125 x leverage and binance employees

themselves say usually this kind of

products look like gambling that's

actually by the way a very common

misspelling uh for somebody who's who's

where English isn't their first language

usually this kind these kinds of

products right anyway usually this kinds

of products look like gambling which may

bring us some compliance and reputation

risk so we need to make sure the product

does not look like a gambling game user

might be easier to get addicted to these

products so we need to enhance

responsible trading or you could say

playing as well so so they know these

products are gambling they know there

are dangers with these but listen to

this at various times during the

relevant period some of the entities

have entered into over-the-counter

transactions with binance customers such

as settling trades into setting

basically moving deposits directly into

counterparty accounts in other words

deposit mismanagement this is pretty

pretty scary uh some of these

allegations here by the cftc and so it's

going to be a little oopsy-doopsy for

binance to deal with especially since

the cftc is basically going for their

throats trying to potentially completely

ban binance they say here that since the

launch of binance in 2017 binance is

taking a calculated phased approach to

increase its U.S customer presence

despite publicly stating that it intends

to block or restrict customers this is

the same thing that they always do they

tell you they have the best and

world-class know your customer rules and

VPN blocking rules at your to your face

but then behind closed doors they

basically allow people to just they show

people where the back doors are and

skirt compliance programs they know the

programs are ineffective and the reason

they know the programs are ineffective

is because their position is well it's a

business decision the more customers we

have the more money we make look in

August 2020 they made 63 million dollars

in fees in May of 21 they made 1.1

billion dollars in fees and the cftc is

basically saying they're purposely

trying to avoid regulation a

deliberately skirting rules because it's

profitable to do so and to some extent

yeah that's true it's extremely

profitable to do so but it also sets up

a potential house cards that basically

CZ runs and there are a ton of bots who

suggest this guy's like some kind of

hero for crypto or whatever but what he

really is is potentially as the cftc

said a fraud he's probably very little

different from Sam bankman freed who was

a complete fraud uh and people like this

deserve to be in jail and there's a

reason this guy uh is uh is not uh

willing to come to the United States

because he knows he'd end up in prison

he's hiding in Dubai for a reason and

you know what people like this do I mean

just look at what um what the last dude

did uh Mr Kwan who was just arrested

basically what they do is they wait uh

the United States Waits until these

people are arrested and then they

actually file the criminal charges

against them this guy Quan was on his

way to Dubai almost made it to Dubai on

his fake passports gets caught in month

and aggro an Eastern European country

the day after he's arrested what happens

boom gets all the criminal indictments

against him from the United States so I

think one of the reasons the US is so

anti crypto right now is because the

entities that are running it are are

basically in your face frauds and the US

is just gearing up to try to do whatever

they can to take down the to stop the

fraud and they don't want people to lose

money they're going as far here as

actually calling BTC eth LTC liquid and

a two Fiat backed stable coins tether

and binance commodities uh basically

allowing them to have jurisdiction over

the regulation for all of this so rip

binance

uh it's uh I I I don't know there's a

reason I've been uh very interested in

good cash flowing companies lately uh

and uh you know I know people like oh

but you know there's all this fraud and

regular stocks and manipulation as well

yeah well one you know yeah two wrongs

doesn't make a right as they say so uh

but but this I mean more and more

everything that snacks up about these

these crypto companies that are off uh

U.S Shores binance FTX more and more

about them it's just pure fraud I have

much more empathy for a company like

coinbase where uh coinbase at least is

here U.S regulated U.S listed and

they're trying uh now just because

they're trying doesn't mean that they're

actually going to win over here at

coinbase uh especially since now they're

getting sued by the SEC which is quite

unfortunate for them because they have a

pretty long response letter about how

frustrating and painstaking it's been

for them to to work with the SEC and how

many proposals they've given to the SEC

to try to basically publicly be able to

list ETFs here's their their piece on

this now this is obviously the coinbase

side of it uh where they they really try

to get proper regulation complete you

know coinbase is trying to go in the

legal direction binance is going in the

illegal direction and you can't really

blame coinbase because they've had so

many frustrations and so much money uh

on on dealing with the SEC uh now

they're getting this Wells notice about

a potential investigation coming uh the

the problem is I really think you need

Congress to dictate are these

Commodities are they Securities who

should regulate these and what should

the rules be for regulation around

crypto and then people should be able to

follow the rules right I think it's very

difficult to

to say like there are no rules and if

people do something that after the fact

we don't like then they get sued right I

think that's problematic and that's

probably not the best form of democracy

but then again you know democracy is

really based on these kind of people

like Kevin McCarthy over here talking on

CNBC and the problem with them is they

can't get anything done so the

politicians Are hamstrung Congress

therefore is hamstrung and therefore the

agencies are hamstrung nobody can really

do anything so basically what they're

trying to do is they're trying to

litigate the regulation for coinbase and

uh uh and and binance through courts

that's what they're trying to do they're

trying to create law through the courts

you ever heard of case law right so you

take the SEC make all of their

complaints against coinbase for things

that they want law the cftc make all of

their complaints for things that they

want law against binance and then get a

Court potentially eventually the Supreme

Court to rule on it and now you can

actually get rule of law without the act

of Congress so that's really what's

happening here but some of the

allegations against coinbase will

probably just clean up coinbase some of

the allegations against finance will

probably lead CZ to have an arrest

warrant out for him for the fraud that's

being perpetrated at binance so it'll be

really interesting to see how it all uh

evolves I think it's quite interesting

but anyway that gives you an update on

all the insanity that's happening with

binance and if any of that makes you

nervous make sure to get life insurance

in as little as five minutes via the

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suit

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