STORY: The world's largest crypto exchange is being sued by a U.S. financial regulator.

It alleges that Binance and its founder Changpeng Zhao illegally operate in the country and run what it called a 'sham' compliance program.

The Commodity Futures Trading Commission accused Binance on Monday of "willful evasion" of U.S. law, while profiting from U.S. customers and business from at least July 2019.

It also said its compliance program had been "ineffective", and, under the direction of Zhao, employees and customers were told to circumvent compliance controls.

They say that Binance broke U.S. laws as it, quote "offered and executed commodity derivatives transactions on behalf of U.S. persons."

Binance's former Chief Compliance Officer Samuel Lim is accused of "aiding and abetting" Binance's violations.

The CFTC said it is seeking monetary penalties, disgorgement of ill-gotten gains and permanent trading and registration bans.

Binance has defended its practices.

In a statement, Zhao described the complaint as "unexpected and disappointing," adding that they did not agree with the "characterization of many of the issues alleged in the complaint."

A spokesperson for Binance said the firm had made "significant investments" to ensure it does not have U.S. users on its platform.

The lawsuit comes amid a broader and increasingly high-profile crackdown on crypto companies.

Binance was founded in Shanghai in 2017 and sits at the heart of the industry.

Its core Binance.com exchange processed trades worth about $23 trillion last year, according to data provider CryptoCompare.