Good morning. U.S. regulators on Monday sued Binance Holdings Ltd., alleging the operator of the world’s largest cryptocurrency exchange kept an illegal foothold in the American market and violated rules designed to prevent illicit financial activity.

The lawsuit sets up a battle between the Commodity Futures Trading Commission, one of the U.S.’s smallest financial regulators, and a global company whose chief executive, Changpeng Zhao, is one of the industry’s most influential figures. Binance has survived, and grown, even as many other crypto companies have gone bankrupt over the past year.

• The CFTC's case: The court complaint alleges a long-running pattern of undisclosed conflicts of interest and illegal activity and says Mr. Zhao and Samuel Lim, who the agency says was Binance’s first chief compliance officer, knew about the regulatory failings but didn’t effectively supervise the conduct. Similar to its case against BitMEX, the CFTC claims that Binance gave Americans access to derivatives such as futures or swaps that must be traded on regulated platforms
   
• A focus on compliance: In the U.S., futures brokerages must scrutinize the identity of new customers and take steps to prevent money laundering. Binance failed to operate an effective program for stopping money laundering, the CFTC said. Like most crypto exchanges, Binance never registered with U.S. regulators, making its risky products off-limits to American traders.
  
  While Binance said its global exchange wouldn't serve Americans, it maintained a loophole that allowed customers to trade on its global platform without submitting to any due-diligence checks, according to regulators. Removing the loophole would be “too painful,” according to a chat between Mr. Lim and another employee.
   
• What regulators are hoping to achieve: The CFTC’s lawsuit, filed in Chicago federal court, seeks a permanent ban for Mr. Zhao and his companies. “If you kick Binance and the individuals out of the U.S. markets, you have dried up a significant source of their income,” said David Slovick, a former CFTC enforcement attorney who is now a partner at Barnes & Thornburg LLP.

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FTC Chair Lina Khan vows to protect competition in AI market.

FTC Chair Lina Khan on Monday said her agency would protect competition in the nascent market for artificial-intelligence tools, warning that big-tech companies could “start to panic” and try to block new entrants through unlawful tactics.

Speaking at an antitrust conference, Ms. Khan said the Federal Trade Commission would be watching to ensure startups can compete in the AI industry.

“As you have machine learning that depends on huge amounts of data and also depends on huge amounts of storage, we need to be very vigilant to make sure that this is not just another site for the big companies becoming bigger and really squelching rivals,” Ms. Khan said.

• A price-fixing lawsuit that Ohio filed Monday against several firms that manage billions of dollars in drug benefits ratchets up scrutiny of the companies while shining a spotlight on their new tactic using overseas subsidiaries.
   
• Manhattan District Attorney Alvin Bragg’s pursuit of potential criminal charges against former President Donald Trump could provide a case for the history books while also testing one of New York City’s top prosecutors.

Fed’s Barr speaks to Congress about Silicon Valley Bank.

The failure of Silicon Valley Bank demonstrates a “textbook case of mismanagement,” the Federal Reserve’s top banking regulator is expected to tell Senate lawmakers on Tuesday, while acknowledging there may have been shortcomings in the central bank’s oversight.

“SVB failed because the bank’s management did not effectively manage its interest-rate and liquidity risk, and the bank then suffered a devastating and unexpected run by its uninsured depositors,” said Michael Barr, the Fed’s vice chairman for supervision, in written testimony released by the central bank.

• Deutsche Bank Stock Price Rebounds Even as Worries Persist
• Eurozone Banks Cut Lending Even Before Latest Financial Turmoil
• To Some Investors, Banks Look Like Bargains

Banks step up to serve crypto firms after Signature, Silvergate blowups.

Some banks are rolling out the welcome mat for cryptocurrency firms that found themselves in need of banking services after the downfall of two big crypto-friendly lenders, Signature Bank and Silvergate Capital Corp.

As crypto companies have scrambled to establish new bank relationships, industry executives say they have received a positive reception from regional banks such as Customers Bancorp, based in West Reading, Pa., and Fifth Third Bancorp, based in Cincinnati.

• Tether Is Winning Stablecoin Battle Despite Looming Risks

Biden restricts use of commercial hacking tools by U.S. agencies.

President Biden restricted the use of commercial hacking tools throughout the federal government as officials said they believed high-powered spyware had compromised devices belonging to at least 50 U.S. personnel working overseas.

Mr. Biden signed an executive order that imposes rules limiting the acquisition and deployment of hacking tools from vendors whose products have been linked to human-rights abuses or are deemed to pose counterintelligence or national security risks to the U.S. It also limits the purchasing of tools if they are sold to foreign governments considered to have poor records on human rights.

• Russia Supplies Iran With Cyber Weapons

• A fast-growing North Carolina lender with a history of buying failed banks is taking on its largest challenge yet with its purchase of Silicon Valley Bank.
   
• Semiconductor companies seeking U.S. grants under the Chips Act will be asked to provide detailed projections for revenue and profit from their new chip-making plants to help evaluate their applications, the Commerce Department said Monday.
   
• Israeli Prime Minister Benjamin Netanyahu on Monday suspended a controversial judicial overhaul plan in an attempt to pull the country back from the brink after mass protests and strikes rocked the nation.
   
• Publishing executives have begun examining the extent to which their content has been used to “train” AI tools such as ChatGPT, how they should be compensated and what their legal options are.
   
• The Supreme Court Monday heard the government’s case to reinstate a law making it a crime to encourage noncitizens to stay in the U.S. unlawfully.
   
• Explosions shook Russian-occupied cities in southern Ukraine, injuring a police chief and hitting a military facility, while a Russian missile strike killed at least two people and injured 29 others in the eastern city of Slovyansk, Ukrainian officials said.
   
• Defaults and vacancies are on the rise at high-end office buildings, in the latest sign that remote work and rising interest rates are spreading pain to more corners of the commercial real-estate market.
   
• Multinational companies are warning that new European Union rules for reporting foreign subsidies are so onerous they could disrupt mergers and acquisitions and impede public tendering.