© Reuters. US Court Greenlights $2.7B Settlement Against Binance In CFTC Case
Benzinga – Binance, the cryptocurrency exchange platform, along with its ex-CEO, Changpeng “CZ” Zhao, have settled a long-standing case with the Commodity Futures Trading Commission (CFTC) by agreeing to pay $2.85 billion, as approved by a U.S. court.
What Happened: Binance will pay the larger share of $2.7 billion while Zhao will cover the remaining $150 million, as reported by Cointelegraph on Sunday. The U.S. District Court for the Northern District of Illinois has approved the settlement, thereby ending the enforcement action launched by the CFTC last November.
Binance and Zhao were found guilty of breaking the Commodity Exchange Act (CEA) and CFTC regulations. The court has ordered Binance to pay $1.35 billion in transaction fees and pay an equivalent amount as a penalty to the CFTC.
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As part of the agreement, Binance and Zhao will introduce stricter Know Your Customer (KYC) measures on the exchange and establish a formal corporate governance structure. In addition, Samuel Lim, the former chief compliance officer at Binance, is required to pay a $1.5 million civil monetary penalty.
Zhao, who relinquished his position as CEO of Binance in November, will stay in the U.S. until his sentencing in February 2024. He could face a maximum of 18 months in prison on money laundering charges.
Why It Matters: This settlement follows recent events where Binance and Zhao have been battling legal issues. In December 2023, CFTC Chairman Rostin Behnam hinted at potential jail time for Zhao amid discussions around the complexities of cryptocurrency regulation.
Furthermore, Binance and its U.S. counterpart Binance.US, along with Zhao, have been contesting allegations from the U.S. Securities and Exchange Commission (SEC). They argued that the SEC failed to establish the criteria of the “Howey Test” in its lawsuit against them. This lawsuit, initiated by the SEC in June, accused the companies of enabling the public to trade unregistered securities through certain cryptocurrency listings and staking services.
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