Hefty Fines for Binance: Court Ruling
A U.S. district court has issued an important ruling against prominent cryptocurrency exchange Binance and its CEO Changpeng “CZ” Zhao. The court’s latest ruling found that Zhao and Binance violated the Commodity Exchange Act and regulations set by the Commodity Futures Trading Commission (CFTC). As a result, Zhao is subject to a personal fine of $150 million.
Severe penalties for regulatory violations
The court’s decision will have serious financial implications for Binance. The exchange must give up $1.35 billion in what it considers unfairly obtained trading fees. Additionally, the CFTC was ordered to pay a fine of the same amount. These penalties reflect the severity of the identified violation.
Mandatory Compliance and Injunctions
The court order requires Zhao and Binance to provide evidence of effective compliance controls. A permanent injunction will also apply to prevent future violations. This move signals the court’s commitment to ensuring continued regulatory compliance.
agreement background
This ruling coincides with the CFTC’s initial settlement announcement on November 21. The CFTC’s allegations focused on Binance’s solicitation of U.S. customers, including quantitative trading firms. This activity reportedly violated the exchange’s own terms and conditions.
Binance’s claims of regulatory evasion
The CFTC accused Binance and Zhao of intentionally ignoring U.S. regulatory requirements. The exchange reportedly allowed prime brokers to create unregulated sub-accounts. These accounts allow U.S. customers to transact directly, bypassing required know-your-customer (KYC) processes.
Allegations of concealment and non-compliance
The CFTC also claims that Binance and Zhao were aware of their regulatory obligations but chose to ignore them. They are accused of actively hiding the presence of American customers on their platform. Moreover, senior executives, including Zhao, reportedly instructed customers to avoid compliance measures.
While this legal resolution is an important step toward regulatory enforcement in the cryptocurrency sector, it highlights the ongoing challenges in achieving full compliance with financial regulations.