The U.S. Commodity Futures Trading Commission (CFTC) announced on the 18th that the U.S. District Court has approved the settlement agreement reached between Binance and the CFTC. Changpeng Zhao (CZ), the founder of Binance, will pay a $150 million fine to the CFTC, with one-third of the amount to be paid within the next 30 days. Binance will also pay $2.7 billion in illegal profits and fines to the CFTC.
Last month on the 21st, Binance reached a settlement agreement with the U.S. Department of Justice, CFTC, and other organizations, admitting guilt and agreeing to pay a $4.3 billion fine. Binance’s founder, Changpeng Zhao, admitted to violating U.S. anti-money laundering laws and resigned as CEO of Binance.
Judge approves CFTC’s settlement with Binance
On the 18th, the CFTC issued a press release announcing that Judge Manish Shah of the Northern District of Illinois has approved the settlement agreement between Binance and the CFTC. Changpeng Zhao will pay a $150 million fine to the CFTC, with one-third of the amount to be paid within the next 30 days. Binance will pay $27 billion to the CFTC.
The CFTC stated that Binance, under the direction of Changpeng Zhao, solicited U.S. customers, including quantitative trading companies, who directly engaged in digital asset derivative trading on the platform. Binance also allowed at least two major brokers to open sub-accounts not subject to Binance’s Know Your Customer (KYC) procedures, allowing U.S. customers to trade directly on the platform, in violation of Binance’s own terms of use.
The CFTC criticized that Binance “chose to ignore these regulations” despite being aware of U.S. regulatory requirements. The judge has required Changpeng Zhao and Binance to improve compliance controls and permanently prohibit further violations. Binance must establish a corporate governance structure, including a board of directors, a compliance committee, and an audit committee with independent members.
The judge also issued an additional order requiring Binance’s former chief compliance officer, Samuel Lim, to pay a $1.5 million civil penalty for assisting and abetting Binance’s violations and engaging in activities to intentionally evade or attempt to evade U.S. law outside the United States.
SEC continues to pursue Binance
It is worth noting that although Binance has reached a settlement agreement with institutions such as the CFTC, the United States Securities and Exchange Commission (SEC) is not included among the regulatory agencies that settled with Binance. The SEC stated earlier this month that it plans to continue its litigation against Binance and stated that the settlement agreement reached between Binance and U.S. authorities supports the SEC’s ongoing lawsuit against the exchange.
However, on the 12th, Binance submitted a response to the court, stating that the settlement agreement reached between Binance and the U.S. Department of Justice and other institutions is not substantively related to the SEC’s allegations against Binance. Binance also argued that the SEC has not provided new and valid evidence for the lawsuit, and therefore requested the court to disregard the SEC’s notice, emphasizing that this does not affect Binance’s arguments seeking the dismissal of the SEC’s lawsuit.
Additional reading:
Binance seeks dismissal of lawsuit: SEC has not provided valid evidence and exceeds its authority
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