A U.S. court has approved a settlement against cryptocurrency exchange Binance and its former CEO Changpeng “CZ” Zhao that requires Binance to pay $2.7 billion and CZ to pay $150 million to the Commodity Futures Trading Commission (CFTC).
The court found violations of the Commodity Exchange Act and CFTC regulations, imposed fines, and directed Binance to recover unfairly obtained trading fees.
The resolution concludes a long-running saga that saw CZ resign as part of a settlement with the U.S. Department of Justice, Treasury and CFTC.
Binance’s former Chief Compliance Officer Samuel Lim was also fined $1.5 million.
The CFTC confirmed the court’s approval of the settlement in a statement on December 18, concluding an enforcement action the CFTC began in November.
The CFTC wrote in a statement:
“The court found that Zhao and Binance violated the Commodity Exchange Act (CEA) and CFTC regulations, imposed a civil penalty of $150 million on Zhao personally, and recovered $1.35 billion in trading fees improperly obtained by Binance. and demanded that it pay a fine of $1.35 billion. CFTC”
The court found that both parties violated the Commodity Exchange Act and CFTC regulations.
CZ’s departure and legal proceedings
On November 21, CZ agreed to step down as CEO of Binance as part of a broader settlement with U.S. regulators.
At the same time, Zhao pleaded guilty to civil and criminal charges related to anti-money laundering laws.
CZ, who faces the possibility of prison, was ordered to remain in the United States until his sentencing date of February 23, 2024.
As part of the agreement, CZ and Binance pledged to strengthen know-your-customer measures for the exchange.
Binance must also establish a formal corporate governance structure, including independent board members, a compliance committee, and an audit committee.
The court separately ordered Binance’s former chief compliance officer Samuel Lim to pay a $1.5 million civil penalty.
This penalty stems from Binance’s participation in activities that aided violations and circumvented U.S. laws.
Binance Leadership Transition
After CZ left, Richard Teng took over as CEO.
In a December 5 interview, Teng assured stakeholders that Binance had undergone significant changes, with a focus on compliance and a commitment to meeting global regulatory expectations.