Binance Resolves U.S. Court Case, Commits to $2.7 Billion Settlement with CFTC

Dec. 19, 2023
Binance Resolves U.S. Court Case, Commits to $2.7 Billion Settlement with CFTC

The settlement imposed by the Commodity Futures Trading Commission (CFTC) upon cryptocurrency exchange Binance and its former CEO, Changpeng Zhao, has now been approved by the U.S. District Court for the Northern District of Illinois. The approval signifies resolving Binance and Zhao’s regulatory matter in the United States.

The CFTC first raised the enforcement action in November, but this recent approval wording draws a line under the saga. In their statement on December 18th, the CFTC announced the court decision stating Zhao and Binance had violated the Commodity Exchange Act (CEA) and CFTC regulations.

Zhao will pay a $150 million personal civil monetary penalty in the settlement. Additionally, For Binance, the CFTC ordered it to disgorge $1.35 billion received from excessive unauthorized transaction fees and pay the regulator a penalty of $1.35 billion.

Settlement: Enhanced Compliance Measures Agreed

As part of the settlement, the former CEO of Binance, Changpeng Zhao (C.Z.), and the cryptocurrency exchange have agreed to improve further the procedures on Know Your Customer (KYC) standards on the platform.

Besides, the agreement also stipulates that Binance must set up a transparent corporate governance framework. This includes independent directors and audits, along with compliance committees.

In a separate order, the court ordered Binance’s former chief compliance officer, Samuel Lim, to pay a $1.5 million civil monetary penalty. Lim allegedly incurs this penalty due to his purported involvement in “aiding and abetting Binance’s violations.” Authorities accuse him of intentionally operating outside the United States to evade or attempt to evade U.S. legal requirements.

Binance’s Transition Under New Leadership

Following C.Z.’s departure, Richard Teng has taken up the position as CEO. This change indicates a shift in leadership, with Teng previously serving as Binance’s global head of regional markets.

In a recent interview on December 5th, Teng stressed the huge changes within Binance, promising stakeholders that more days of compliance gaps were history. He assured investors that Binance had committed itself to strengthening compliance measures. Additionally, he reiterated the corporation’s commitment to meeting regulation demands globally.

Over the past 18 months, Binance has needed to terminate or significantly alter its primary services. This has occurred across various global jurisdictions, including the Netherlands, Cyprus, Australia, and Canada.

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Rida Fatima

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An ardent wordsmith with a rich five-year background in delving into the realms of finance and cryptocurrencies. Alongside curating captivating blogs, Unique's talents extend to crafting imaginative and engaging content.