A U.S. Court Approves Binance’s Settlement with CFTC
A settlement between cryptocurrency exchange Binance and the Commodity Futures Trading Commission (CFTC) has been approved by a U.S. court. The court found that Binance and its former CEO, Changpeng ‘CZ’ Zhao, violated the Commodity Exchange Act and other CFTC regulations. As part of the settlement, Binance will pay a $1.35 billion fine to the CFTC and hand over an additional $1.35 billion in “ill-gotten transaction fees.” Zhao himself faces a $150 million fine.
Binance’s Violations and Concealment of U.S. Customers
The CFTC stated that Binance actively solicited U.S. customers while concealing their presence on the platform, enabling them to bypass compliance controls. The CFTC also revealed that at least two prime brokers were able to open sub-accounts exempt from Binance’s know your customer (KYC) procedures.
Changes in Binance’s Operations and Governance
As part of the settlement, Binance has offboarded the identified trading firms and committed to implementing KYC procedures for all existing sub-accounts. Additionally, the exchange will establish a corporate governance structure with independent board members, compliance committees, and audit committees.
Binance’s Exit from the U.S. Market
Binance’s settlement with U.S. regulators requires the exchange to completely exit the country. CEO Changpeng Zhao will step down after pleading guilty to anti-money laundering violations. Zhao is currently awaiting sentencing in February 2024 and could face up to five years in prison.
New Leadership and Improved Compliance Controls
Binance’s new CEO, Richard Teng, acknowledged the inadequacy of the exchange’s compliance controls and emphasized that they have learned from past mistakes. The exchange aims to improve its operations going forward.
Hot Take: Binance Faces Consequences for Regulatory Violations
Binance’s approved settlement with the CFTC highlights the consequences faced by cryptocurrency exchanges for regulatory violations. The multimillion-dollar fines and enforcement actions serve as a warning to other platforms to ensure compliance with applicable laws and regulations. Binance’s commitment to implementing stricter compliance controls and governance structures is a step towards rebuilding trust within the industry and avoiding future legal repercussions.
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