In recent news, Brazil’s Securities and Exchange Commission (CVM) has launched an investigation into cryptocurrency exchange Binance. The regulator alleges that the company may have engaged in illegal activity by offering crypto derivatives to customers, despite being issued a stop order by the government in 2020.

Although Binance complied with the order by suspending futures trading in 2021, recent findings suggest that the exchange did not fully comply with the regulation. Screenshots reportedly show that Brazilian customers were able to change the language of Binance’s website in order to access features that were otherwise restricted, including futures trading.

Binance itself acknowledged this workaround, with a support agent advising customers: “The futures platform is not available in PT-BR [Portuguese-Brazil]. You can change the language.” Such advice is illegal in Brazil.

A legal expert quoted by Valor suggested that Binance may not be solely responsible for its employees’ actions in this case. Instead, authorities could charge the customer service agent responsible for the advice, who may face up to two years in prison if convicted.

The investigation by Brazil’s securities regulator comes at a time of significant regulatory and banking challenges for the global cryptocurrency exchange market. The SEC is targeting specific exchanges, while many others are facing cutoffs from USD payment rails. These events have upended the market structure and shifted the competitive landscape for exchanges.

Consolidation among exchanges is expected during bear markets, but the recent events have upended the market structure. Despite these challenges, Binance has been expanding its global reach through partnerships and acquisitions. However, this investigation may raise questions about the company’s compliance with local regulations.

As the cryptocurrency market continues to evolve, regulatory compliance is becoming increasingly important for exchanges. Industry observers and participants will be closely watching the outcome of the investigation into Binance’s activities in Brazil

In summary, Brazil’s Securities and Exchange Commission has launched an investigation into Binance, alleging that the exchange may have violated a stop order by offering crypto derivatives to customers. Although Binance suspended futures trading in compliance with the order, the exchange may not have fully complied with the regulation. The investigation comes at a time of significant regulatory and banking challenges for the global cryptocurrency exchange market. As the industry evolves, regulatory compliance is becoming increasingly important for exchanges. The outcome of the investigation into Binance’s activities in Brazil will be closely watched by industry observers and participants alike.