A Chinese-born Canadian citizen, Mr. Zhao has hopped from country to country and now largely splits his time between Dubai and Paris, according to a person with knowledge of the matter. Mr. Zhao traveled to the United States at least once in 2022, the person said.
Binance has long been dogged by allegations that it skirted global money-laundering rules and sought to evade regulations in the countries where it operates. At times, the privately-held exchange has operated out of China, Malta and Singapore; a spokesman said the firm now has major regional offices in Dubai and Paris, with 8,000 full-time employees worldwide.
Binance is not authorized to operate in the United States, so Mr. Zhao has a smaller business for American users called Binance.US., which says it functions separately from the global exchange. But the company’s U.S.-based customers have been able to access the main platform using virtual private networks to disguise their whereabouts.
Binance has faced U.S. regulatory scrutiny for years. In February, Patrick Hillmann, its chief strategy officer, revealed the exchange was in talks with regulators about a settlement to resolve the various legal investigations with a fine or some other penalty. He said the company was “highly confident and feeling really good” about the discussions.
A month later, the C.F.T.C. filed its lawsuit.
The agency sued Binance affiliates based in the Cayman Islands and Ireland, saying those corporate entities were “directly or indirectly owned” by Mr. Zhao and linked to dozens of other business entities maintained by the exchange. The complaint said that Mr. Zhao was personally responsible for Binance’s compliance failures, describing a meeting in which he acknowledged the existence of a loophole that let users get around know-your-customer protocols.
The C.F.T.C. also sued Binance’s former top compliance official, Samuel Lim, claiming he had helped American customers evade systems designed to prevent money laundering. A lawyer for Mr. Lim did not respond to requests for comment.
The lawsuit added that Binance allowed three unnamed American trading firms to operate on its platform, despite rules prohibiting U.S. firms from doing so. The firms were Jane Street Group, Tower Research Capital and Radix Trading, according to a person familiar with the matter. There’s no indication that the companies, previously identified by Bloomberg News, are under investigation by federal authorities.
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