The US Commodity Futures Trading Commission (CFTC) filed a civil complaint against the world’s biggest cryptocurrency exchange - Binance - and it's not looking great.

The CFTC alleges the exchange violated several commodity exchange regulations by failing to register its derivative products and failing to fence off its services from U.S. customers. But it’s also filed with specific details about alleged criminal activity from the company's top officer, whom the CFTC accuses of knowing about and engaging in criminal transactions.

Binance called the CFTC complaint “unexpected and disappointing.” “We have made significant investments over the past two years to ensure we do not have US users active on our platform,” the exchange said.

Following the CFTC’s filing, Zhao wrote “4” on Twitter, a code to his followers instructing them to ignore “fake news” and “attacks”.

The CFTC in its complaint, cited internal communications that showed Binance knew the platform facilitated potentially illegal activities.

According to the complaint, in one instance in 2019, Binance received information “regarding Hamas transactions”. Lim, a former Chief Compliance Officer at the exchange, reportedly told the colleague that terrorists typically send “small sums,” because “large sums constitute money laundering.” The colleague responded, “can barely buy an AK47 with 600 bucks.”

Lim also acknowledged in February 2020 that some of Binance’s customers, including those from Russia, were involved in illegal activities. Lim said in a chat about those trades: “Like come on. They are here for crime.” The money laundering reporting officer at Binance responded at the time, “we see the bad, but we close 2 eyes.”

One reference in the lawsuit directly mentions Hydra via a written conversation between lower level Binance employees and Lim. In July 2020, Lim was asked if a customer with “over 5m USD worth of transactions… sourced from questionable services” should be denied exchange services or if the user should be allowed to make a new account. Lim told the employee to let the customer know they should be “careful with flow of funds, especially from darknet like hydra,” and that “he can come back with a new account.”

The CFTC alleges the above instances are just one of many where Binance tolerated use of their platform for “illicit activity” under the implicit direction of CEO Zhao, who allegedly told Lim that “offboarding” customers was “bad.”

The exchange has been under investigation by the US Department of Justice since 2018 for “allegedly flouting U.S. compliance laws, anti-money laundering rules, and sanctions.”

According to data provided by two separate blockchain analysis firms, Binance processed around $780 million in crypto transactions to and from Hydra between 2017 and 2022. This amount is similarly matched by LocalBitcoins, which closed last month after 10 years in operation, and Bitzlato, the recently-sanctioned no-KYC cryptocurrency exchange.

The CFTC is seeking remedies including monetary penalties, registration and trading bans, disgorgement and a permanent injunction against further violations.