Court Approves CFTC’s Settlement With Binance

A U.S. district court has approved a previously announced settlement and entered an order against cryptocurrency exchange Binance and its former CEO, Changpeng Zhao.

The U.S. District Court for the North District of Illinois’ consent order of permanent injunction, civil monetary penalty and equitable relief against Binance and Zhao concludes a Commodity Futures Trading Commission (CFTC) enforcement action, the CFTC said in a Monday (Dec. 18) press release.

It formalizes a settlement announced on Nov. 21 that imposes a $150 million civil monetary penalty personally against Zhao and requires a $2.7 billion payment from Binance to the CFTC, half of which is a return of “ill-gotten” transaction fees and half is a penalty, according to the release.

These follow the court’s finding that Zhao and Binance violated the Commodity Exchange Act (CEA) and CFTC regulations, per the report.

“The order also obligates Zhao and Binance to make certifications as to the existence, application and efficacy of Binance’s improved compliance controls, and permanently enjoins them from further violations as charged,” the CFTC said in the release.

Binance said in a Nov. 21 blog post that it reached resolutions with the CFTC, Department of Justice, Office of Foreign Assets Control and Financial Crimes Enforcement Network regarding their investigations into registration, compliance and sanctions issues.

The company also said in the post that Zhao, the founder and CEO of Binance, agreed to step down and plead guilty to violating criminal anti-money laundering requirements.

“Binance grew at an extremely fast pace globally, in a new and evolving industry that was in the early stages of regulation, and Binance made misguided decisions along the way,” the company said in the post. “Today, Binance takes responsibility for this past chapter.”

Zhao also faces up to 18 months in prison under federal sentencing guidelines for violating federal money-laundering rules, but may be subject to a stiffer penalty that could be sought by the Justice Department.

A judge ruled on Dec. 8 that Zhao must remain in the United States while awaiting his sentencing on Feb. 23, rejecting lawyers’ arguments that his is not a flight risk.