A Brazilian congressional committee has issued a recommendation to local law enforcement, urging them to pursue indictments against Binance CEO Changpeng “CZ” Zhao and three other Binance executives. This comes in the wake of an investigation into financial pyramid schemes operating in Brazil.
On October 10, the committee published a 500-page final report, accusing Zhao, along with Binance executives Daniel Mangabeira, Guilherme Haddad Nazar, and Thiago Carvalho, of engaging in fraudulent management practices. The report also alleges they operated without sufficient authorization and offered securities trading without the necessary approvals.
In the report, Deputy Ricardo Silva, who led the committee, claimed that Binance, Zhao, and others had established an opaque network of legal entities, all controlled directly or indirectly by Zhao. These entities were alleged to lack a defined business purpose other than evading compliance with the law.
The committee also recommended the indictment of 45 other individuals who were deemed to have strong evidence of involvement in criminal schemes, some of which were linked to various cryptocurrency companies, including travel firm 123milhas and the crypto scheme 18K Ronaldinho, among others.
Silva noted that while Binance has faced regulatory noncompliance issues in multiple jurisdictions, in Brazil, their operations were particularly “surrounded by suspicion.”
The committee’s recommendations, though not legally binding, serve as suggestions to local authorities. It will be up to law enforcement agencies and regulatory bodies to decide whether to pursue further actions.
In response to these developments, Binance expressed its willingness to engage in constructive discussions regarding the challenges facing the crypto industry but strongly rejected baseless accusations and attempts to make the company a target.
This regulatory scrutiny in Brazil is part of a broader crackdown on Binance by authorities around the world. In the United States, Binance is currently facing two separate lawsuits from local commodities and securities regulators, alleging violations of financial regulations. In Australia, Binance had its derivatives license revoked, and its offices were searched by the financial regulator in July. Additionally, Binance made the decision to exit the Canadian market in May due to the country’s new regulatory controls.
These actions against Binance underscore the evolving and increasingly stringent regulatory landscape for cryptocurrency exchanges worldwide.
