Judge OKs CFTC’s $2.7B Binance Settlement: Zhao to Pay $150M Fine

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In the United States, a court has officially approved an agreement between Binance, a digital asset exchange, and the Commodity Futures Trading Commission (CFTC).

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This comes almost a month after the former CEO, Changpeng ‘CZ’ Zhao, admitted guilt to charges linked to anti-money laundering violations. The resolution of this case holds significance as it has had a notable impact on the cryptocurrency world.

U.S. Judge Approves Binance’s Multi-Billion Dollar Settlement with CFTC

A federal judge has given the green light to the substantial settlement between Binance and the Commodity Futures Trading Commission (CFTC). As per the December 18 press release from the CFTC, the U.S. District Court for the Northern District of Illinois has sanctioned the settlement, mandating Binance to pay a $1.35 billion fine to the CFTC. Additionally, the exchange must forfeit an additional $1.35 billion in “ill-gotten transaction fees.” Former CEO Changpeng ‘CZ’ Zhao is also required to pay a $150 million fine, with a third of the amount due within the next 30 days.

The CFTC alleges that Binance, under CZ’s guidance, actively sought U.S.-based customers and assisted them in bypassing compliance controls by concealing their presence on the platform. The settlement includes commitments from both CZ and Binance to enhance Know Your Customer (KYC) procedures on the exchange. Moreover, it mandates the world’s largest crypto exchange, by trading volumes, to establish a formal corporate governance structure, featuring a board of directors with independent members, a compliance committee, and an audit committee.

This settlement marks the conclusion of a prolonged legal battle against CZ and Binance. Earlier this year, the CFTC brought them to court, accusing them of knowingly violating U.S. federal law and operating an unregistered derivatives exchange. On November 21, CZ pleaded guilty to Anti-Money Laundering violations and agreed to step down from his role at Binance as part of a broader settlement with the U.S. Department of Justice, the Treasury Department, and the CFTC. However, the exchange still faces an ongoing lawsuit with the U.S. Securities and Exchange Commission (SEC) for securities law violations.

While awaiting his sentencing ruling in February 2024, Zhao, the crypto billionaire, is currently residing in the U.S. This decision follows District Judge Richard Jones’s order for him to stay in the country due to the flight risk. Notably, Zhao faces an 18-month jail sentence.

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Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.

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