A Brazilian congressional committee has advised local law enforcement that Binance CEO Changpeng Zhao “CZ”’ and three other Binance executives face potential legal action in connection with an investigation into financial pyramid schemes in Brazil.
On October 10, the committee issued a comprehensive 500-page report accusing Zhao and local Binance executives Daniel Mangabeira, Guilherme Haddad Nazar, and Thiago Carvalho of engaging in deceptive management practices.
They were also accused of operating without the necessary authorization and conducting securities trading activities without proper approval.
According to the report, which was overseen by Deputy Ricardo Silva, Binance, Zhao, and their associates allegedly established a complex network of legal entities under Zhao’s direct or indirect control. This network seemingly lacked clarity of its business purpose, with the primary objective of evading legal compliance.
Additionally, the report recommended the indictment of 45 other individuals, based on “compelling evidence” suggesting their involvement in various criminal schemes.
These individuals were associated with multiple crypto-currency related companies, including 123milhas, a travel company, and the cryptocurrency project 18K Ronaldinho, among others.
Silva noted that Binance, facing allegations of regulatory noncompliance in several countries, is viewed with suspicion in Brazil.
The committee proposed that the Federal Public Ministry launch an inquiry into all of Binance’s operations in Brazil, focusing on potential tax evasion, money laundering, and support for organized crime and terrorism.
Furthermore, the committee recommended that Brazil’s Securities and Exchange Commission (CVM) investigate Binance’s sale of derivative products.
The committee argued that Binance had continued to offer derivative products despite being instructed to stop, which they considered a repeated violation of market regulations.
Binance is already being investigated by the CVM for allegedly offering derivative products unlawfully in the country.
The committee’s suggestions are not legally binding, local authorities and regulatory bodies will decide whether to take further action. Binance stated that it remains committed to working with the committee and cooperating with local law enforcement in Brazil.
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