A U.S. court has approved the previously announced settlement between crypto exchange Binance and the Commodity Futures Trading Commission (CFTC).
Per a press release from the CFTC, the U.S. District Court for the Northern District of Illinois formalized the settlement between Binance and the CFTC, finding that the exchange and its former CEO Changpeng 'CZ' Zhao violated the Commodity Exchange Act and other CFTC regulations. The settlement requires Binance to pay a $1.35 billion fine to the CFTC, as well as handing over a further $1.35 billion in "ill-gotten transaction fees." Zhao himself also faces a fine of $150 million.
The CFTC noted that the exchange "actively solicited" U.S. customers and concealed their presence on the platform, helping them to evade compliance controls. At least two prime brokers were able to open "sub-accounts" that were not subject to Binance's own know your customer (KYC) procedures, the CFTC said.
As part of the settlement, the trading firms identified by the CFTC have been "offboarded" by Binance, with the exchange certifying that KYC procedures will be applied to all existing sub-accounts and that it will offboard any that fail to meet its compliance controls.
Federal Court Enters Order Against Binance and Former CEO, Zhao, Concluding CFTC Enforcement Action: https://t.co/YJD1lglbsZ
— CFTC (@CFTC) December 18, 2023
The exchange will also be required to implement a corporate governance structure with a board of directors including independent members, as well as compliance and audit committees.
Binance's CFTC fine comes as part of a wider settlement with U.S. regulators that requires the exchange to "completely exit" the country, with Zhao stepping down as CEO after pleading guilty to anti-money laundering violations.
Former Binance CEO CZ Can’t Leave US Until Court Decides If He’s a Flight Risk
Changpeng "CZ" Zhao, former CEO of crypto exchange Binance, must stay in the United States for now, a federal judge ruled Monday. This comes after Zhao pleaded guilty last week to violating the Bank Secrecy Act. The decision puts on hold an earlier ruling that would have allowed Zhao to return to his family in the United Arab Emirates while awaiting sentencing in February 2024. Prosecutors argued Zhao poses a flight risk, given his wealth and the lack of an extradition treaty with the UAE. Last...
Zhao is currently in the U.S. awaiting sentencing in February 2024, after a federal judge ordered him to remain in the country, deeming him a flight risk. The former CEO faces up to five years in prison, though the Justice Department is reportedly seeking an 18-month sentence for Zhao.
Binance's new CEO, Richard Teng, recently conceded that the exchange's compliance controls were "inadequate," arguing that it had "moved past" previous mistakes.