US Court Approves Settlement Against Binance, Firm to Pay $2.7B to CFTC – The Commodity Futures Trading Commission (CFTC) has obtained a court order requiring Binance, along with its former CEO Changpeng “CZ” Zhao, to pay $2.7 billion and $150 million, respectively. This resolution concludes the CFTC enforcement action.
On December 18, the CFTC declared that the settlement, previously disclosed, was approved by the U.S. District Court for the Northern District of Illinois. This marks the resolution of the enforcement action initiated by the CFTC in November.
“The court finds Zhao and Binance violated the Commodity Exchange Act (CEA) and CFTC regulations, imposes a $150 million civil monetary penalty personally against Zhao, and requires Binance to disgorge $1.35 billion of ill-gotten transaction fees and pay a $1.35 billion penalty to the CFTC,” wrote the CFTC in a statement.
The endorsed settlement signifies the end of an extended legal dispute involving CZ and Binance brought forth by the CFTC. The agency filed a lawsuit against the executive and the exchange on March 27, alleging violations of federal law and the operation of an unlawful derivatives exchange.
As of November 21, CZ consented to resign from his position as the head of Binance as a component of a broader agreement involving the U.S. Department of Justice, the Treasury Department, and the CFTC. On that day, Zhao admitted guilt to multiple civil charges and one criminal charge related to Anti-Money Laundering laws.
As of December 7, CZ received an order to stay in the U.S. until his sentencing on February 23, 2024. He could potentially face up to 18 months in prison for money laundering charges and has committed not to contest any sentence within that specified duration. As a component of the agreement, both CZ and Binance have committed to additional measures, ensuring the continuation of Know Your Customer procedures on the exchange.
Additionally, Binance is mandated to establish a formalized corporate governance structure, encompassing a board of directors with independent members, a compliance committee, and an audit committee. The court also made a separate order for Binance’s former chief compliance officer, Samuel Lim, to pay a $1.5 million civil monetary penalty for “aiding and abetting Binance’s violations and engaging in activities outside of the U. S. to willfully evade or attempt to evade U.S. law.”
Binance’s former global head of regional markets, Richard Teng, took over as CEO following CZ’s departure. In an interview, Teng described Binance as being “totally different,” assuring investors that the days of having “gaps in compliance” were now firmly behind it. Teng emphasized that going forward, Binance is deeply committed to complying with regulatory agencies worldwide.