Binance Settles With US court, Agrees To Pay $2.7B to CFTC
- Binance and former CEO CZ faced penalties for violating CEA and CFTC rules, solidifying the resolution.
- Settlement mandates tough penalties, KYC improvements, and a governance overhaul for Binance after unauthorized fees.
- Richard Teng's CEO role marks a shift emphasizing compliance reforms, despite Binance's recent global service adjustments.
Binance's $3 Billion Penalty: CFTC's Enforcement Action Explained
Binance CEO Changpeng Zhao Has Been Ordered To Pay 150M Dollar
The U.S. District Court for the Northern District of Illinois has officially approved a settlement imposed on Binance, the cryptocurrency exchange, and its former CEO, Changpeng Zhao, by the Commodity Futures Trading Commission (CFTC). The CFTC initially raised the enforcement action in November, and this recent approval solidifies the resolution.
In their statement on December 18th, the CFTC confirmed the court's decision, highlighting that Zhao and Binance were found to have breached the Commodity Exchange Act (CEA) and CFTC regulations.
As part of the settlement, Zhao faces a personal civil monetary penalty of $150 million. Additionally, Binance is required to disgorge $1.35 billion obtained through unauthorized transaction fees and pay a further $1.35 billion penalty to the CFTC.
Settlement Terms Include Enhanced Compliance Measures
As part of the settlement, both Changpeng Zhao (CZ), the former CEO of Binance, and the cryptocurrency exchange itself have committed to implementing additional measures to uphold Know Your Customer (KYC) standards on the platform.
Furthermore, the agreement mandates Binance to establish a structured corporate governance framework, featuring a board of directors inclusive of independent members, a compliance committee, and an audit committee.
In a separate order, the court has directed Binance's former chief compliance officer, Samuel Lim, to pay a $1.5 million civil monetary penalty. This penalty is attributed to Lim's alleged role in "aiding and abetting Binance's violations" and engaging in activities beyond the United States to deliberately evade or attempt to evade U.S. legal requirements.
Binance's Transition Under New Leadership
Following CZ's departure, Richard Teng, Binance's former global head of regional markets, assumed the CEO role, signifying a shift in leadership.
In a recent interview on December 5th, Teng emphasized the substantial changes within Binance, assuring stakeholders that the days of compliance gaps were definitely over. He reassured investors of Binance's dedicated efforts toward bolstering compliance measures and stressed the company's strong commitment to meeting regulatory expectations worldwide.
During the past 18 months, Binance has faced the necessity of either terminating or significantly altering its primary services across various global jurisdictions, including the Netherlands, Cyprus, Australia, and Canada.
Also Read: Why is Bitcoin Going Down Today: Reason for Bitcoin Falling
