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Binance and Changpeng 'CZ' Zhao Settle Landmark Case After U.S. Court Approval

2023/12/19 10:06

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The court formally issued a consent order imposing various penalties and injunctions on the cryptocurrency exchange and its CEO, Changpeng 'CZ' Zhao.'

Binance Faces Significant Fine in Settlement Agreement

In a recent announcement, the court stated that Zhao and Binance were accused of violating the Commodity Exchange Act and CFTC regulations. As a consequence, Zhao was personally fined $150 million in civil monetary penalties.

Binance is obligated to surrender $1.35 billion in alleged unlawfully obtained transaction fees and is also required to pay an extra $1.35 billion penalty to the CFTC.

As per the court order, Zhao and Binance are required to provide evidence of the efficacy of enhanced compliance controls. The court also emphasizes the need for permanent injunctions to prevent any future violations.

This ruling comes after the CFTC's initial declaration of the settlement on November 21st.

Binance Faces Multiple Allegations Filed by CFTC

The CFTC alleges that Binance, under Zhao's leadership, unlawfully sought out U.S. customers, including quantitative trading firms, in violation of its own Terms of Use.

However, it has been reported that the exchange permitted prime brokers to create unregulated 'sub-accounts.' This enabled direct trading by U.S. customers without appropriate know-your-customer (KYC) protocols.

The CFTC also asserted that Zhao and Binance were knowledgeable about U.S. regulatory obligations but deliberately chose to disregard them.

Moreover, the CFTC alleges that Zhao and Binance actively concealed the existence of U.S. customers on the platform. It is also claimed that senior management, including Zhao, facilitated violations of U.S. law by instructing customers to bypass compliance controls.

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