Court approves Binance's settlement with Zhao Changpeng, paying $2.7 billion fine to the U.S. CFTC

The Northern District of Illinois Court has ordered the cryptocurrency exchange Binance and its former CEO Zhao Changpeng CZ to pay fines of up to $2.7 billion to the U.S. Commodity Futures Trading Commission (CFTC). Source.

Binance Violates Commodity Exchange Act

According to a statement from the CFTC on December 18, the court ruled that Zhao Changpeng and Binance violated the Commodity Exchange Act (CEA) and CFTC regulations. Zhao Changpeng was fined $150 million in civil penalties, and Binance was ordered to return $1.35 billion in improper trading fees and pay a $1.35 billion fine to the CFTC.

End of Long-Term Litigation for Binance

This settlement marks the end of the long-term litigation by the CFTC against Zhao Changpeng and Binance. The CFTC filed a lawsuit against Zhao Changpeng and his exchange on March 27, accusing him of evading federal laws and running an illegal derivatives exchange.

Binance founder Zhao Changpeng agreed to resign and settle for $4.3 billion.

Resignation and Admission of Guilt by Former CEO

On November 21, Zhao Changpeng agreed to resign as part of a broader settlement with the U.S. Department of Justice, Treasury, and CFTC. On the same day, he pleaded guilty to several civil charges and one criminal charge related to anti-money laundering laws.

Binance Post-Penalty Measures

Enhanced Customer Verification Measures

As part of the settlement, Zhao Changpeng and Binance agreed to take further steps to ensure the exchange maintains customer identity verification measures. Additionally, Binance will need to implement a formal corporate governance structure, including establishing a board of directors with independent members, a compliance committee, and an audit committee.

Former Compliance Officer Fined

The court also issued another order for Binance's former compliance officer, Samuel Lim, to pay a $1.5 million civil penalty for aiding Binance in violating regulations and engaging in activities outside the U.S. to evade or attempt to evade U.S. laws.

Future Outlook for Binance

Richard Teng took over as CEO of Binance on November 21, succeeding Zhao Changpeng (CZ), emphasizing that Binance is different from its early days and that previous compliance gaps no longer exist:

"I am taking over to continue driving growth plans and working closely with global regulatory authorities. The regulatory cloud over Binance in recent months is dissipating, especially after reaching a $4.3 billion settlement with the U.S. Department of Justice. As one of the settlement conditions, CZ cannot be involved in the company's daily operations."

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