Jane Street Group, Tower Research Capital, and Radix Trading have been revealed as the three unnamed "VIP" clients of Binance Holdings Ltd., mentioned in the Commodity Futures Trading Commission's (CFTC) lawsuit against the cryptocurrency exchange, according to a report.
The CFTC accused Binance BNB/USD of "sham" compliance with U.S. derivatives regulations last week, including not registering with the regulator and failing to prevent American users from accessing its exchange.
The three U.S.-based quantitative trading firms were cited anonymously in the March 27 lawsuit as examples of U.S. clients using the platform.
However, they were not accused of any wrongdoing by the regulator, Bloomberg reported.
Nevertheless, the mention of U.S.-headquartered companies using offshore entities to trade on Binance has raised concerns within the quantitative trading industry.
Despite their involvement in crypto, equities, and other traditional assets remaining their primary focus, a major regulatory misstep could impact their overall ability to conduct business.
The CFTC complaint identified Radix as Trading Firm A, Jane Street as Trading Firm B, and Tower Research as Trading Firm C, the report quoted sources as saying.
Radix co-founder Benjamin Blander told the Wall Street Journal that the firm believes it did nothing wrong by trading through offshore entities on Binance and has been cooperating with the CFTC.
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The CFTC alleged that Binance "actively facilitated violations of US law" by helping unspecified U.S.-based traders circumvent know-your-customer rules and compliance measures intended to block their access.
Trading on overseas platforms that are not registered with U.S. regulators like the CFTC can be a compliance gray area for Wall Street firms.
As per the CFTC, institutional trading firms perpetually trading Bitcoin and other crypto derivatives on Binance received "VIP" treatment from the exchange.
This included lower transaction fees and faster access for trades, in exchange for providing liquidity on the platform and generating trading fee revenue.
Binance also offered to notify its top traders promptly about any law enforcement inquiries concerning their accounts, according to the complaint.
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