- CFTC Court Decision: Highlights the U.S. District Court’s approval of the settlement between Binance and former CEO CZ, and highlights the significant financial penalties imposed by the CFTC.
- Enforcement and Compliance: We discuss enforcement action details, CZ’s guilty plea, restrictions imposed, and future regulatory compliance emphasis, signaling changes to Binance’s operations following the settlement.
The U.S. District Court for the Northern District of Illinois has officially approved a settlement involving the famous cryptocurrency exchange Binance and Binance’s former CEO Changpeng Zhao (CZ), ordering Binance to pay a whopping $2.7 billion, and CZ 1. It was fined $500 million. In response to enforcement actions by the Commodity Futures Trading Commission (CFTC).
The CFTC said in a statement on December 18 that the court’s approval concludes a long-running legal dispute that the CFTC began last November. According to the CFTC, the court found both CZ and Binance guilty of violating the Commodity Exchange Act. (CEA) and CFTC regulations.
The ruling requires CZ to personally pay $150 million in civil penalties, while Binance will recover $1.35 billion in unfairly obtained trading fees and pay an additional $1.35 billion in fines to the CFTC. asked to pay.
Federal court issues injunction against Binance and former CEO Zhao, concluding CFTC enforcement action: https://t.co/YJD1lglbsZ
– CFTC (@CFTC) December 18, 2023
This agreement ends a long legal battle between CZ, Binance, and the CFTC that began when the CFTC filed a lawsuit. CZ and Binance On March 27, he was indicted on charges of evading federal law and operating an illegal derivatives exchange.
As part of the settlement, CZ agreed to step down from his position at Binance under a broader agreement signed with the U.S. Department of Justice, Treasury, and CFTC on November 21.
CZ also pleaded guilty to civil and criminal charges related to the Anti-Money Laundering Act (AML). The court then ordered CZ to remain in the United States until his scheduled sentencing date of February 23, 2024, when he could face up to 18 months in prison for money laundering.
Also read: Binance’s former CEO Changpeng Zhao (CZ) could face 10 years in prison.
The agreement outlines stringent measures for both Binance and CZ, requiring strong know-your-customer (KYC) measures for the exchange and requiring Binance to adopt a formalized corporate governance structure. This structure includes the establishment of a Board of Directors, Compliance Committee, and Audit Committee comprised of independent members.
The court also issued a separate order imposing a $1.5 million civil penalty on Binance’s former chief compliance officer, Samuel Lim, for allegedly aiding Binance’s violations and engaging in activities to evade U.S. law.
Following CZ’s departure, Binance’s former global head of regional markets, Richard Teng, assumed the CEO role. In a recent interview, Teng assured stakeholders of Binance’s reformed approach, emphasizing its commitment to eliminating compliance gaps and strictly complying with regulators around the world.
I am honored and most humbled to take on the role of Binance’s new CEO.
We operate the world’s largest cryptocurrency exchange by trading volume. The trust placed in us by our 150 million users and thousands of employees is a responsibility I take seriously and uphold…
— Richard Teng (@_RichardTeng) November 21, 2023
Over the past 18 months, Binance has seen its core services shut down or significantly modified in a variety of global jurisdictions, including the Netherlands, Cyprus, Australia, and Canada, leading to increased regulatory scrutiny of its operations.