The Commodity Futures Trading Commission (CFTC) lawsuit against Binance, the largest crypto exchange by trading volume, is, in Timothy Massad’s words, a “big deal.”

"If you read the complaint, there is so much detail to it. It suggests that [CFTC] did have some information from people inside,” said the regulator's former chairman, now a research fellow at Harvard University’s John F. Kennedy School of Government. He told CoinDesk TV’s “First Mover” on Tuesday the level of detail is “really quite striking.”

The CFTC, which is responsible for regulating the U.S. derivatives markets, filed a lawsuit Monday against Binance and its founder, CEO Changpeng Zhao, for allegedly offering unregistered derivatives products and helping U.S.-based customers sidestep compliance controls via the use of virtual private networks (VPN).

“This complaint basically says that Binance and Zhao himself deliberately and systematically cultivated U.S. business, helped U.S. persons get around those restrictions and even did things internally to try to hide how much U.S. business they were doing,” said Massad, also director of the Digital Assets Policy Project.

In a blog post response, Zhao said the complaint “appears to contain an incomplete recitation of fact,” adding that the exchange does not agree ”with the characterization of many of the issues alleged in the complaint.”

Will the CFTC’s lawsuit against Binance finally prompt congressional lawmakers to enact legislation for regulating the crypto industry in the U.S.? Massad said it is unlikely.

“I don’t see the movement toward a consensus on that in Congress,” said Massad, who led the CFTC for nearly three years during the Obama administration.

"I think there's really quite a variety of views from those who are very skeptical about crypto and don't want to pass a law that they feel would legitimize it too much, and those who ... believe in the innovative potential and would like to see greater regulatory clarity and perhaps rules that allow for more innovation," he said.

Meanwhile, the agency’s filing against Binance will take some time to litigate, he said. At least for the moment, “we’ll just have to watch these enforcement actions play out.”

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Fran Velasquez

Fran is CoinDesk's TV writer and reporter. He is an alum of the University of Wisconsin-Madison and CUNY's Craig Newmark Graduate School of Journalism, where he earned his master's in business and economic reporting. In the past, he has written for Borderless Magazine, CNBC Make It, and Inc. He owns no crypto holdings.