The largest crypto exchange platform by trading volume has now found itself as the subject of a lawsuit. Specifically, Binance and CEO Changpeng Zhao (CZ) have been sued by the US Commodity Futures Trading Commission (CFTC) for alleged regulations violations.

The US Commodity Futures Trading Commission is a Government entity designed to protect the public from potential wrongdoings in the financial sector. Additionally, they execute their own investigation and prosecute potential commodities fraud, including those occurring in foreign currency schemes, according to their website.

According to Bloomberg, the regulator is suing the exchange for allegedly breaking trading and derivatives rules. The report states that the CFTC filed the lawsuit on Monday in federal court in Chicago.

The regulator also alleged that Binance, CZ, and Lim violated eight core provisions of the Commodity Exchange Act, including laws that require controls designed to prevent and detect money laundering and terrorism financing.

The CFTC Chair Rostin Benham stated in the press release, “Today’s enforcement action demonstrates that there is no location, or claimed lack of location, that will prevent the CFTC from protecting American investors. I have been clear that the CFTC will continue to use all of its authority to find and stop misconduct in the volatile and risky digital asset market.”

He added, “For years, Binance knew they were violating CFTC rules, working actively to both keep the money flowing and avoid compliance. This should be a warning to anyone in the digital asset world that the CFTC will not tolerate willful avoidance of U.S. law. I applaud the diligent and dedicated work of the CFTC’s Enforcement team in bringing this action, and for their hard work in addressing illegal operations in the digital asset space.”

Without commenting on any of the specific allegations in the suit, a Binance spokesperson said the company has made significant investments over the past two years to ensure we do not have U.S. users active on our platform, including growing its compliance team from 100 to 750 people and spending $80 million on (know-your-customer) and other compliance vendors and tools.

“The complaint filed by the CFTC is unexpected and disappointing as we have been working collaboratively with the CFTC for more than two years. Nevertheless, we intend to continue to collaborate with regulators in the U.S. and around the world. The best path forward is to protect our users and to collaborate with regulators to develop a clear, thoughtful regulatory regime,” the spokesperson said.

This news quickly sent ripples through markets, driving bitcoin’s price down by about 3% within minutes of the disclosure, though it rebounded, recovering most of the loss as the day progressed. Binance’s exchange token BNB plunged as much as 6% from its price from right before the news came out. Additionally, crypto-related stocks also fell.