The CEO of Binance, Changpeng Zhao, along with three other executives, may soon face legal action in Brazil. A congressional committee in the country has recommended that local law enforcement pursue action against them after an investigation into financial pyramid schemes.
The committee’s recommendation is based on a detailed 508-page report on pyramid schemes. While it’s the committee’s role to suggest indictments, the decision to proceed with legal action rests with the Brazilian police.
If the authorities decide to press charges, the executives, including Changpeng Zhao, Daniel Mangabeira, Guilherme Haddad Nazar, and Thiago Carvalho, could face allegations of fraudulent management and operating a financial institution without proper authorization. The charges could be framed as a “crime against the national financial system.”
These executives are accused of setting up an “opaque network of legal entities” controlled by Zhao, which lacked a defined business purpose, and was geared towards evading compliance with the law.
Binance’s Brazilian division is currently under investigation by the local securities regulator, CVM, in connection to its derivatives sales. In addition, the report proposes the indictment of 45 other individuals connected to various cryptocurrency companies.
Binance has firmly denied these allegations, reaffirming its commitment to responsible practices and collaboration with law enforcement worldwide. A spokesperson for the company stated, “We strongly reject the exposure of our users or employees with baseless accusations of bad practices and the attempts to make Binance a target.”
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