A U.S. court has approved the previously announced settlement between crypto exchange Binance and the Commodity Futures Trading Commission (CFTC).
Per a press release from the CFTC, the U.S. District Court for the Northern District of Illinois formalized the settlement between Binance and the CFTC, finding that the exchange and its former CEO Changpeng ‘CZ’ Zhao violated the Commodity Exchange Act and other CFTC regulations. The settlement requires Binance to pay a $1.35 billion fine to the CFTC, as well as handing over a further $1.35 billion in “ill-gotten transaction fees.” Zhao himself also faces a fine of $150 million.
The CFTC noted that the exchange “actively solicited” U.S. customers and concealed their presence on the platform, helping them to evade compliance controls. At least two prime brokers were able to open “sub-accounts” that were not subject to Binance’s own know your customer (KYC) procedures, the CFTC said.
As part of the settlement, the trading firms identified by the CFTC have been “offboarded” by Binance, with the exchange certifying that KYC procedures will be applied to all existing sub-accounts and that it will offboard any that fail to meet its compliance controls.
The exchange will also be required to implement a corporate governance structure with a board of directors including independent members, as well as compliance and audit committees.
Binance’s CFTC fine comes as part of a wider settlement with U.S. regulators that requires the exchange to “completely exit” the country, with Zhao stepping down as CEO after pleading guilty to anti-money laundering violations.
Zhao is currently in the U.S. awaiting sentencing in February 2024, after a federal judge ordered him to remain in the country, deeming him a flight risk. The former CEO faces up to five years in prison, though the Justice Department is reportedly seeking an 18-month sentence for Zhao.
Binance’s new CEO, Richard Teng, recently conceded that the exchange’s compliance controls were “inadequate,” arguing that it had “moved past” previous mistakes.
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