Binance to pay $2.7 billion under CFTC settlement

A US court approved a global settlement between Binance and the CFTC. The exchange will pay $1.35 billion as a civil penalty and return $1.35 billion of ill-gotten commissions.

Federal Court Enters Order Against Binance and Former CEO, Zhao, Concluding CFTC Enforcement Action: https://t.co/YJD1lglbsZ

— CFTC (@CFTC) December 18, 2023

Binance and its former CEO Changpeng Zhao pleaded guilty to violating the Commodity Exchange Act. The ex-head of the company agreed to pay a $150 million penalty from his own funds.

The court found that Binance, under Zhao’s direction, actively recruited U.S. clients, including trading firms that executed derivatives trades directly on the platform. In violation of its own terms of use, the exchange allowed at least two prime brokers to open subaccounts without undergoing KYC procedures.

It was also found that Zhao and Binance knowingly ignored U.S. regulatory requirements and helped American clients evade compliance oversight.

After the filing of the CFTC complaint the defendants closed the accounts of the trading firms named in it.

The court ordered Binance to strengthen its KYC programs and implement a corporate-governance framework, including a board of directors with independent members, as well as compliance and audit committees.

Under a separate order by Judge Manish Shah, Binance’s former Chief Compliance Officer Samuel Lim will pay a $1.5 million penalty.

In November, the exchange and Zhao settled U.S. Department of Justice money-laundering claims, agreeing to pay $4.3 billion and $50 million, respectively.

In the United States, the SEC’s case against Binance and its former executives is ongoing.