Regulatory troubles are nothing new to Binance, which in most cases in the past have managed to get rid of or circumvent obstacles and co-operate with regulators.

But when it comes to the US, the exchange finds itself a target for several institutions.

Some US financial regulators will investigate access to password exchanges. Some of the research dates back to 2018, and now one of the key US derivatives market regulators has filed a lawsuit on the premise that the investigation began in early 2021.

The Commodity Futures Trading Federation filed a lawsuit against Binance and CEO Zhao Changpeng and former chief compliance officer Samuel Lim on March 28th.

The lawsuit alleges that Binance violated US derivatives laws and regulations by providing derivatives trading services to US users without applying for registration with an appropriate sales market regulator. CFTC reprimanded Binance for successfully placing business above regulatory compliance.

The lawsuit also made headlines today, as CFTC charged not only the exchange, but also Zhao and Lin. U. S. regulators also accused Binance and CEO of violating commodity trading laws seven times and controlling rules for foreign companies.

Peter Waugh, executive editor of the Daily Economics of the American Economic Research Institute, told Cointelegraph that taking into account the overall approach of the United States to digital currency companies, CFTC's lawsuit is not surprising-regulators seem to have used every conceivable response to resist the expansion of the industry.

"important strict regulatory actions are likely to cause Binance to increasingly shift its business processes outside the United States. In addition, taking into account that Binance.US occupies a very large market share in US virtual currency trading volume, unless traders switch to a replacement service platform, it is very likely that shutting down the exchange's US business process could lead to a reduction in Chinese trading volume.

CFTC has been proactively verifying large enterprises after adopting regulatory and law enforcement actions against Tether and Bitfinex, resulting in a huge change in the layout of login passwords. The lawsuit against Binance looks no different.

CFTC has required that Binance, Zhao, Lim and all affiliated companies be prohibited from applying for physical online trading, owning all spot interests in commodities, applying for registration at CFTC or exempting them from applying for registration or serving as responsible persons, management or employees in the application for registration. It also stipulates that Binance repayment receives profits, profits, commissions and costs of trading transactions from American customers, pays civil penalties identified by the people's court, and accepts jurors to hear the matter.

The fate of Binance in the United States looks uncertain at this stage

CFTC's lawsuit has already accumulated direct evidence, including Wechat chats between Zhao Wei and Binance executives. Some sales and marketing experts point out that this is likely to determine the fate of the world's access to password exchanges in the United States.

Mark Fidelman, founder of SmartBlock, told Cointelegraph that the lawsuit was likely to damage years of advancement made by Binance.US, Binance's sister company in the US, which the world exchange claims to be a separate physical line. "the charges against Binance are severe and the punishment may end the business process," Fidelman said. "

In addition to violating regulatory requirements, the lawsuit specifically mentions Merit Peak, the trading arm of Binance.US. CFTC claims that Zhao Wei has complete control of Binance and all related companies.

The lawsuit also strongly links Trust Wallet and Binance Labs (because of leverage in the United States) to most Binance workers who are leveraged in the United States, including group builders hired by the exchange, known as "Binance Angels," as a reason to mention litigation in the United States.

Perhaps the most daunting charge is that Binance has nearly 300 direct and indirect contact accounts with Zhao, which are not good for customers.

In the past, CFTC's lawsuits against data encryption companies have been agreed on with high fines and stop-of-service orders. McGinnis Young, a master of law from Harvard University and chief executive of Swan BitCoin, a bitcoin company, told Cointelegraph,Binance.US that it seemed unlikely to stay in business for longer, depending on the proof in CFTC court.

On the one hand, Binance.US provides less service than Binance. Customers feel that Binance.US is an American customer and Binance.US is an American customer. On the other hand, if CFTC can prove to the court that Binance.US helped Binance absorb more exotic goods and use VPN to hide his American identity, then Binance.US may not work in the future.

Binance didn't respond directly to Cointelegraph's request for comment.

The company did issue a public response to the lawsuit, in which Zhao stated that the report seemed to include objective facts but did not elaborate, and that they were "unwilling to describe many of the problems alleged in the report."

Many believe the lawsuit is particularly important for the future development of Binance in the United States, and some further classify it as regulatory politics.

Adam Cochran, a fragmented real estate developer and angel investor in the financial industry, set out the final outcome of the lawsuit on Twitter. He said that if Binance and others mentioned that executives could not touch the U. S. people's court, or did not defend themselves in court, then CFTC would win. However, if they participate, "it will be found that the whole process will open up all their international books for US regulators, including the physical lines owned by Zhao Ziyang himself, in order to provoke any problems."

The possible impact on the login password sales market

CFTC's charges against Binance are serious, and it's not just CFTC that must be worried about login password swaps. At this stage, the exchange is still being investigated and analyzed by the Securities and Exchange Commission, the Justice Department and the United States Inland Revenue Service.

At the end of 2022, Binance accounted for 92% of the total value of BTC (BTC) transactions. At the beginning of last year, the exchange accounted for only 45% of the market, but the cancellation of trading fees in June and the bankruptcy of its competitor FTX in November helped it attract customers.

Binance is an important source of market interest rates. Important market makers use Binance to buy and sell and get liquidity. The sales market to explore the source of price and liquidity information may be affected by the termination of Binance business processes. Retail customers and corporate traders will eventually suffer as a result.

Although an ongoing investigation and analysis and most of CFTC's allegations are mere allegations and have not been confirmed in court, Jason Allegrte, chief law, regulation and compliance officer of FireBlock, a digital money financial firm, told Cointelegraph,CFTC that the outcome of the lawsuit is likely to accelerate the company's withdrawal from the US sales market.

Depending on the final impact on Binance, it could cause shock waves in the global digital money sales market. For better or worse, Binance is now similar to a key infrastructure of the financial system because of the high volume of global transactions through it. The termination of Binance services may damage the liquidity in the market.

In the long run, he adds, other liquidity sources will emerge in the form of new entrants, including participants in the traditional financial system, such as Nasdaq, which has just announced plans to enter the digital money sales market.

U. S. regulators have been trying to "issue login passwords based on the frustration and variability of manufacturing laws and regulations," Alleberger said. " He cites the case of Coinbase, a US-regulated public access code exchange that recently received a notice from Wells Fargo from SEC.

"Today, you have a different type of exchange that has received administrative enforcement reports from commodity spot regulators because he is mostly in the same business," he said. For Crypto, it is also the worst of the two worlds-one company has Coinbase accused of SEC, and the other has accused Binance of CFTC.

Binance has been strictly regulated on stainless steel wire around the world, and over the years, it has received many compliance complaints from the United States, Japan, France, Australia and other countries. However, many experts point out that CFTC's lawsuit is likely to become a heavy burden on the exchange.