Major crypto exchange Binance will pay $2.7 billion in disgorgement and penalty to the Commodity Futures Trading Commission (CFTC), thereby concluding the regulator’s enforcement action against the company.
Binance founder and former CEO Changpeng Zhao (CZ) will also pay $150 million to the regulatory watchdog.
CFTC’s Case Against Binance Comes to an End
In a press release on Dec. 18, 2023, the CFTC announced that the United States District Court for the Northern District of Illinois entered a previously proposed consent order against Binance and its former CEO.
While the company will disgorge $1.3 billion of ill-gotten transaction fees and another $1.3 billion civil monetary penalty to the regulator, Zhao will pay a personal civil monetary penalty of $150 million.
In March, the CFTC filed a lawsuit against Binance and Zhao, slamming various allegations against them, including soliciting US customers while deliberately ignoring the country’s regulatory requirements. The regulator also alleged that Binance, Zhao, and other top executives helped US clients bypass compliance controls.
However, the former CEO refuted the CFTC’s accusations, while Binance sought to dismiss the case, arguing that the agency was going beyond its jurisdiction by attempting to regulate foreign entities and individuals operating and residing outside of the United States.
Meanwhile, the latest development concludes all charges by the CFTC against Binance and Zhao, signaling the end of a legal battle between the company and the agency. An excerpt from the announcement reads:
“In addition, the order requires Binance and Zhao to certify Binance will implement a corporate governance structure that includes a Board of Directors with independent members, a Compliance Committee, and an Audit Committee.”
Binance’s Ongoing Legal Battle With the SEC
Zhao, in November 2023, stepped down from his CEO role at Binance and pleaded guilty to breaking anti-money laundering rules. The ex-Binance chief also exited his position as chairman of the board of directors at Binance.com, the American arm of the exchange.
CZ, who faces a maximum of 18 months in prison, will remain in the US until his sentencing on Feb. 23, 2024, following a recent court ruling.
Binance, on the other hand, reached a $4.3 billion settlement with the US Department of Justice (DOJ) after admitting to floundering the Bank Secrecy Act, among other violations.
According to a statement by the DOJ at the time, “Binance’s guilty plea is part of coordinated resolutions with the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) and Office of Foreign Assets Control (OFAC) and the U.S. Commodity Futures Trading Commission (CFTC).”
Meanwhile, the crypto exchange continues its legal battle with the Securities and Exchange Commission (SEC) after the latter accused the company of securities violations in June. Binance has since filed a lawsuit to dismiss the SEC’s allegations.
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