Binance, the cryptocurrency exchange already facing regulatory scrutiny in various jurisdictions worldwide, is now being subjected to increased legal pressure in Brazil. Brazilian lawmaker Alfredo Gaspar has formally requested that the National Congress compel Guilherme Haddad Nazar, General Manager of Binance Brazil, to appear for questioning.
Gaspar’s formal request, which was addressed to the Parliamentary Commission of Inquiry into Pyramid Schemes, called upon the commission to summon Mr. Nazar to “provide clarifications regarding the company’s operations in cryptocurrency management… and possible partnerships with national companies involved in financial services associated with cryptocurrencies.” The justification for this request was the US Securities and Exchange Commission’s civil suit against Binance Holdings and its affiliates for several allegations of securities law violations.
The Brazilian Securities and Exchange Commission’s decision to reopen an administrative proceeding against Binance and its Brazilian representative, B Fintech, was also cited by Gaspar. A São Paulo court had frozen 500,000 Brazilian real from Binance due to suspicions of operating a pyramid scheme. Gaspar also noted that Binance or one of its affiliates had faced similar inquiries in Japan, China, Germany, and the United Kingdom. In each case, the company failed to comply with the regulations imposed by each country.
Binance Withdraws from Markets Facing Enforcement Action
With authorities increasing the pressure, Binance has begun to withdraw from markets that seem less viable in the face of enforcement action. For instance, in the UK, Binance withdrew its Financial Conduct Authority (FCA) registration application on June 19. On June 15, it ceased operations in the Netherlands altogether after failing to secure a critical VASP license.
Binance.US stopped support for USD trading pairs on June 13, opting to continue operations as a “crypto-only” exchange as its U.S. banking partners ended their relationships with the embattled exchange.
Guilherme Haddad Nazar, who was appointed to his position in December 2022, is the nephew of Fernando Haddad, Brazil’s Minister of Finance. He previously held leadership positions at Uber and Loft. Alfredo Gaspar de Mendonça Neto, the Federal Deputy in Brazil’s Chamber of Deputies, who made the formal request, is a former prosecutor. Gaspar’s background includes coordinating the State Group to Combat Criminal Organizations and serving as both Secretary of State for Social Defense and as Attorney General of Justice for the Public Ministry of Alagoas.
As Binance faces mounting legal pressures in Brazil, the company is withdrawing from markets that it deems less viable in the face of enforcement action. Meanwhile, Binance’s General Manager in Brazil has been summoned to appear for questioning by the National Congress in Brazil. This comes as Binance is already facing regulatory scrutiny in various jurisdictions worldwide.