U.S. Court Approves Settlement with Binance
The U.S. District Court for the Northern District of Illinois has approved a settlement with Changpeng Zhao and Binance Holdings Limited. The Commodity Futures Trading Commission (CFTC) announced the court’s approval of the settlement.
Binance Found in Violation of CEA and CFTC Regulations
The court found that Binance, under Zhao’s direction, actively solicited U.S. customers for digital asset derivative transactions, violating its own Terms of Use. Binance also allowed prime brokers to open “sub-accounts” without proper KYC procedures, and both Zhao and Binance concealed the presence of U.S. customers on the platform.
Binance to Pay $1.35 Billion Penalty
As part of the settlement, Binance must pay a $1.35 billion penalty to the CFTC and disgorge $1.35 billion of ill-gotten transaction fees. Changpeng Zhao will personally pay a $150 million civil monetary penalty.
Former Chief Compliance Officer Also Penalized
Binance’s former Chief Compliance Officer Samuel Lim is required to pay a $1.5 million civil monetary penalty for aiding and abetting Binance’s violations and evading U.S. law.
Compliance and Governance Measures Imposed
Binance and Zhao must make certifications regarding improved compliance controls and are permanently enjoined from further violations. They are also required to implement robust corporate governance structures.
Certifications Provided by Binance and Zhao
In response to the court’s order, Binance has offboarded identified quantitative trading firms mentioned in the complaint and implemented stricter KYC procedures for customer onboarding. Existing sub-accounts are no longer allowed to bypass compliance controls. Binance and Zhao have provided certifications affirming these actions.
Hot Take: CFTC’s Enforcement Actions Send a Strong Message
The approval of the settlement between the CFTC, Binance, and Changpeng Zhao marks a significant step in the CFTC’s enforcement actions against Binance. The substantial penalties imposed and the emphasis on compliance measures demonstrate the CFTC’s commitment to preventing future violations in the crypto industry.
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