Judge Orders Binance and CZ to Pay $2.85 Billion
In a significant legal development, Judge Manish Shah has ruled that cryptocurrency exchange Binance and its former CEO, Changpeng “CZ” Zhao, must pay a massive $2.85 billion to the Commodity Futures Trading Commission (CFTC).
Verdict Approves Settlement with CFTC
The court has given its approval to the settlement reached between the CFTC and Binance and CZ. The consent order includes a permanent injunction, civil monetary penalty, and equitable relief against Zhao and Binance.
Additional Obligations Imposed on Binance
The court order also imposes additional requirements on Binance. This includes providing certifications on compliance controls and offboarding non-compliant accounts. Additionally, Binance must establish a corporate governance structure with independent members, a Compliance Committee, and an Audit Committee.
CFTC Findings on Violations by Binance and Leadership
The court found that Binance, under Zhao’s direction, actively solicited customers in the United States and violated its own Terms of Use by allowing certain prime brokers to trade exempt from KYC procedures. Zhao and senior management at Binance were aware of U.S. regulatory requirements but deliberately ignored them.
CZ Steps Down as Part of Settlement
In the settlement, CZ agreed to step down as CEO of Binance. This decision was part of a broader settlement with various government agencies. As part of the settlement, CZ pleaded guilty to civil charges and a criminal charge related to anti-money laundering laws.
CFTC Case Concludes with $2.85 Billion Settlement
The legal battle between the CFTC and CZ has come to an end with the approval of the settlement. Binance will pay $2.85 billion to the CFTC, marking one of the largest penalties imposed on a cryptocurrency exchange.
Hot Take: Binance and CZ Face Massive Penalties
The ruling against Binance and CZ is a significant blow, with both parties ordered to pay billions of dollars in penalties. The court’s findings highlight the violations and egregious practices conducted by Binance and its leadership, including actively soliciting U.S. customers and facilitating non-compliant trading. The settlement includes CZ stepping down as CEO, signaling a major shift in leadership. This case serves as a reminder that regulatory compliance is crucial in the cryptocurrency industry, and failure to adhere to regulations can result in severe consequences.
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