Key takeaways:
- The CFTC will receive payments of $150 million from CZ Zhao and $2.7 billion from Binance as a result of an order imposed by a US court against the crypto exchange.
- With the authorized settlement, the CFTC’s protracted legal action against CZ and Binance comes to an end.
The Commodity Futures Trading Commission (CFTC) will receive payments of $150 million from CZ Zhao, the former CEO of Binance, and $2.7 billion from Binance as a result of an order imposed by a US court against the cryptocurrency exchange.
The US District Court for the Northern District of Illinois has authorized the previously announced settlement, meaning that the enforcement action that the CFTC first disclosed in November has come to an end, the agency said in a statement on December 18. In an announcement, the CFTC noted:
“The court finds Zhao and Binance violated the Commodity Exchange Act (CEA) and CFTC regulations, imposes a $150 million civil monetary penalty personally against Zhao, and requires Binance to disgorge $1.35 billion of ill-gotten transaction fees and pay a $1.35 billion penalty to the CFTC,”
With the authorized settlement, the CFTC’s protracted legal action against CZ and Binance comes to an end. On March 27, the agency filed a lawsuit against the executive and his exchange for running an unauthorized derivatives exchange and dodging federal law.
CZ consented to resign as the CEO of Binance on November 21 as part of a larger settlement with the CFTC, the Treasury Department, and the US Department of Justice. Zhao pleaded guilty to multiple civil and one criminal offence pertaining to anti-money laundering legislation on the same day.
Remaining in the United States until his sentencing date of February 23, 2024, was mandated for CZ on December 7. Accused with money laundering, he faces a maximum sentence of eighteen months in jail. He has consented to waive his right to an appeal at that point.
In exchange for settling the dispute, Binance has agreed to establish a formal corporate governance structure that includes an audit committee, a compliance committee, and a board of directors with independent members. CZ has also committed to take additional actions to guarantee that Know Your Customer policies are upheld on the exchange.
Samuel Lim, the former chief compliance officer of Binance, was also ordered by the court to pay a $1.5 million civil monetary penalty for his involvement in actions outside of the US that were intended to intentionally avoid or attempt to escape US law, as well as for aiding and abetting Binance’s crimes.
Binance has been forced to discontinue or drastically alter its basic services in several international jurisdictions during the last 18 months, including the Netherlands, Cyprus, Australia, and Canada.
