A U.S. court has issued a ruling against cryptocurrency exchange Binance and its former CEO, Changpeng “CZ” Zhao, resulting in Binance being ordered to pay $2.7 billion and CZ personally fined $150 million to the Commodity Futures Trading Commission (CFTC).
On December 18, the CFTC announced that the U.S. District Court for the Northern District of Illinois had sanctioned the previously disclosed settlement, thereby concluding the legal action initiated by the CFTC in November.
According to the CFTC’s statement, “The court determined that Zhao and Binance breached the Commodity Exchange Act (CEA) and CFTC regulations, leading to a $150 million civil monetary penalty against Zhao personally, and ordering Binance to forfeit $1.35 billion in illicitly acquired transaction fees and to pay an additional $1.35 billion fine to the CFTC.”
This settlement finalizes a protracted legal battle between CZ, Binance, and the CFTC. The agency filed a lawsuit against the executive and his exchange on March 27, accusing them of circumventing U.S. laws and operating an unauthorized derivatives exchange.
On November 21, as part of a broader agreement with the U.S. Department of Justice, the Treasury Department, and the CFTC, CZ consented to resign from his position at Binance. On the same day, Zhao admitted guilt to several civil infractions and one criminal charge related to Anti-Money Laundering regulations. On December 7, CZ was mandated to remain in the U.S. until his sentencing on February 23, 2024. He risks up to 18 months in prison on money laundering charges and has agreed not to contest any sentence of up to that duration.
As a condition of the settlement, both CZ and Binance have committed to enhancing their Know Your Customer protocols and implementing a formal corporate governance structure. This includes establishing a board of directors with independent members, a compliance committee, and an audit committee.
Additionally, the court ordered Binance’s former chief compliance officer, Samuel Lim, to pay a $1.5 million civil penalty for his role in “aiding and abetting Binance’s violations and deliberately circumventing U.S. law.”
Following CZ’s departure, Richard Teng, previously Binance’s head of global regional markets, assumed the CEO role. In a December 5 interview with Cointelegraph, Teng emphasized Binance’s transformation, reassuring stakeholders that compliance gaps were a thing of the past. He stated that Binance is now deeply committed to adhering to global regulatory standards.
In the last 18 months, regulatory pressures have compelled Binance to either cease or significantly modify its primary services in various regions, including the Netherlands, Cyprus, Australia, and Canada.
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