Binance and Former CEO Settle with CFTC for $2.85 Billion
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Binance and Former CEO Settle with CFTC for $2.85 Billion

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Azeez Mustapha

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Binance, a global crypto exchange powerhouse, and its former CEO, Changpeng Zhao, have agreed to a substantial settlement of $2.85 billion with the U.S. Commodity Futures Trading Commission (CFTC). This resolution comes on the heels of Zhao’s admission last month to two counts of conspiring to evade U.S. regulations and sanctions.

CFTC's press release on the settlement with Binance and CZ
Image: CFTC

Judge Manish Shah, overseeing the case, approved the settlement on December 14. Zhao, acknowledging that Binance knowingly provided crypto trading services to U.S. customers without proper registration or adherence to CFTC rules, will bear a personal fine of $150 million, with an initial $50 million due within 30 days. Simultaneously, Binance will pay a hefty $1.35 billion in civil penalties and an additional $1.35 billion in disgorgement of transaction fees earned from U.S. customers.

The CFTC issued a stern statement, asserting that Binance and Zhao intentionally circumvented U.S. laws to capitalize on U.S. investors. The settlement, according to the statement, serves as a clear message that the CFTC will hold accountable those who operate unlawfully in U.S. derivatives markets.

What now for Binance and CZ?

As part of the agreement, Binance and Zhao are obligated to establish a corporate governance structure comprising a board of directors with independent members, a compliance committee, and an audit committee. Furthermore, they must collaborate with the CFTC and other U.S. authorities in any ongoing or future investigations.

This settlement is a crucial facet of the broader crackdown on the behemoth crypto exchange by various U.S. agencies, including the Treasury Department and the Justice Department. In late November, these agencies collectively announced a record-breaking $4.3 billion global settlement with Binance and Zhao, signifying a robust stance against illicit activities within the cryptocurrency realm.

Zhao stepped down as chairman of Binance.US, the exchange’s U.S. affiliate, last week. He said he would focus on his philanthropic activities and that his stake in Binance.US was now purely economic.”

 

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