Wednesday, 28 February 2024
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US court approves $2.7 billion CFTC fine against Binance

Do Kwon gets 4-month prison sentence for passport fraud

  • Binance will pay $2.7 billion and its former CEO Changpeng Zhao $150 million.
  • The fine is part of the $4.3 billion settlement Binance agreed with the DOJ, FinCEN, OFAC and CFTC.

A US judge has approved the $2.7 billion and $150 million fine that Binance and former CEO Changpeng Zhao agreed to pay as settlement with the Commodity Futures Trading Commission (CFTC).

The fine is part of the $4.3 billion settlement Binance agreed with the DOJ, FinCEN, OFAC and CFTC in November. Zhao also resigned as Binance CEO as part of the settlement, and later stepped down from the Binance.US board.

Binance to pay $2.7 billion and Zhao $150 million

A press release by the CFTC announced that Judge Manish Shah of the District Court for the Northern District of Illinois had issued an order approving the settlement and concluding the regulator’s enforcement action against Binance and CZ.

Per the court order, Binance founder Zhao will pay a $150 million fine, while Binance will pay $2.7 billion. For the exchange, the penalty is split into $1.35 billion to the CFTC and $1.35 billion as disgorgement in ill-gotten trading fees.

In formalizing the settlement initially announced on November 21 [See CFTC Press Release No. 8825-23], the court finds Zhao and Binance violated the Commodity Exchange Act (CEA) and CFTC regulations,” the CFTC press release noted.

The court also ordered Zhao and Binance to certify “the existence, application, and efficacy of Binance’s improved compliance controls.” The order also warns against any further violations, with any new onboarding of customers required to complete all the KYC procedures.

Other obligations placed on Binance and Zhao include ensuring that sub-accounts, including by prime brokers, do not bypass the exchange’s compliance controls. The exchange will also offboard all accounts that do not complete KYC checks or fail to meet compliance requirements.

Apart from the $2.85 billion penalty against Binance and CZ, the court also approved a $1.5 million civil penalty against Samuel Lim, the former Chief Compliance Officer at Binance.

Lim was accused of “aiding and abetting Binance’s violations.” He also allegedly engaged in offshore activities outside that willfully evaded or tried to evade US law.

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