Banning US customers apparently isn't enough. That's why the CFTC began probing Bitfinex in late 2017, after they had already prohibited US residents from their exchange. The CFTC asserts that it has jurisdiction over spot exchanges simply by virtue of the fact that they regulate Bitcoin futures markets. That link above shows they've further asserted that this jurisdictions covers altcoins too.
That's why Binance needs to be careful, otherwise they'll have a market manipulation probe on their hands like Bitfinex already does.
That's why Binance needs to be careful, otherwise they'll have a market manipulation probe on their hands like Bitfinex already does.
If that's the case then CFTC will also need to convince not only themselves but also foreign courts. Perhaps there are already treaties in place which would aid them, but I'm not sure if they're that broad.
Bitfinex is hiding in the BVI, Hong Kong and elsewhere but they apparently respond to and purportedly comply with all US regulator subpoenas. Why? Because these offshore exchanges know that even if the US can't manage to seize their bank accounts or cryptocurrency, they can completely destroy their brands overnight by indicting them and seizing their .com domains.
I'm not sure exactly how broad the treaty is, but Malta is covered under the US-EU MLAT executed in 2006. Specifically, the treaty governs these issues, and CFTC requests would fall under "assistance to administrative or regulatory authorities":
Quote
Since the United States and Malta do not have a bilateral mutual legal assistance treaty in force between them, the instrument is a partial treaty governing only those issues regulated by the U.S.-EU Mutual Legal Assistance Agreement, specifically: Articles 4 (identification of bank information), 5 (joint investigative teams), 6 (video-conferencing), 7 (expedited transmission of requests), 8 (assistance to administrative or regulatory authorities), 9 (use limitations), 10 (requesting State's request for confidentiality); and 13 (grounds for refusal).
With respect to the designations required by Article 15 of the U.S.-EU Mutual Legal Assistance Agreement, Article 1 of the Annex (identification of bank information) specifies that Malta's point of contact for the exchange of bank information under this Article is the Office of the Attorney General, and that, like the United States, Malta will provide assistance under this Article with respect to money laundering and terrorist activity punishable under the laws of both States and with respect to such other criminal activity as the States may notify each other. Article 5 of the Annex provides that requests for assistance to administrative or regulatory authorities shall be transmitted between the U.S. Department of Justice and the Office of the Attorney General of Malta.
With respect to the designations required by Article 15 of the U.S.-EU Mutual Legal Assistance Agreement, Article 1 of the Annex (identification of bank information) specifies that Malta's point of contact for the exchange of bank information under this Article is the Office of the Attorney General, and that, like the United States, Malta will provide assistance under this Article with respect to money laundering and terrorist activity punishable under the laws of both States and with respect to such other criminal activity as the States may notify each other. Article 5 of the Annex provides that requests for assistance to administrative or regulatory authorities shall be transmitted between the U.S. Department of Justice and the Office of the Attorney General of Malta.
Binance's apparent plan was to egregiously flout regulations for a few years -- they still have never even registered with FINCEN! -- and then fall into line as regulators began catching up with them. That may work out, but they can't keep acting like it's 2015 and US regulators won't come after them. That was the mistake that BTC-e, 1Broker and others made.
