Binance and CFTC Reach a $1.35 Billion Settlement, CZ to Pay $150 Million

In a significant development, the U.S. District Court for the Northern District of Illinois has approved and entered a consent order of permanent injunction, civil monetary penalty, and equitable relief against Changpeng Zhao and Binance Holdings Limited.

The Commodity Futures Trading Commission (CFTC) announces the court’s approval of the settlement.

Binance to Pay CFTC $1.35 Billion

The court finds Zhao and Binance in violation of the Commodity Exchange Act (CEA) and CFTC regulations. It further accusses Binance, under Zhao’s direction, for actively soliciting U.S. customers, including quantitative trading firms, for digital asset derivative transactions, violating its own Terms of Use.

Furthermore, the court finds that Binance allowed prime brokers to open “sub-accounts” not subject to Binance’s know your customer (KYC) procedures. Zhao and Binance knowingly concealed the presence of U.S. customers on the platform.

As part of these accusations, Binance must pay a $1.35 billion penalty to the CFTC. Moreover, Binance is also required to disgorge $1.35 billion of ill-gotten transaction fees. On the other hand, Changpeng Zhao will pay $150 million civil monetary penalty personally.

A separate order by Judge Manish S. Shah requires Binance’s former Chief Compliance Officer Samuel Lim to pay a $1.5 million civil monetary penalty for aiding and abetting Binance’s violations and engaging in activities outside of the U.S. to evade U.S. law.

Compliance and Governance Measures

Binance and Zhao are required to make certifications regarding the existence and efficacy of improved compliance controls. They are permanently enjoined from further violations as charged.

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Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.

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