The Commodity Futures Trading Commission (CFTC) has secured a significant legal victory as the U.S. District Court for the Northern District of Illinois greenlights the settlement against Binance and its CEO.
The court officially entered a consent order. This imposed a series of penalties and injunctions against the crypto exchange and its CEO Changpeng “CZ” Zhao.
Binance Has Been Hit With a Major Fine
According to a recent statement, the court declared that Zhao and Binance allegedly violated the Commodity Exchange Act and CFTC regulations. This resulted in a $150 million civil monetary penalty against Zhao personally.
Binance is required to disgorge $1.35 billion of alleged ill-gotten transaction fees. Additionally, pay an additional $1.35 billion penalty to the CFTC.
The court order requires proof from Zhao and Binance regarding the effectiveness of improved compliance controls. However, it notes it must have permanent injunctions preventing further violations.
This decision follows the CFTC’s initial announcement of the settlement on November 21.
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CFTC Alleged Multiple Claims Against Binance
The CFTC claim that Binance, under Zhao’s direction, allegedly solicited U.S. customers, including quantitative trading firms, violating its own Terms of Use.
However, the exchange reportedly allowed prime brokers to open unregulated “sub-accounts.” This facilitated direct trading by U.S. customers without proper know-your-customer (KYC) procedures.
The CTFC further claimed that Zhao and Binance were aware of U.S. regulatory requirements but “chose to ignore them.”
Furthermore, alleging they actively concealed the presence of U.S. customers on the platform. Additionally, senior management, including Zhao, allegedly facilitated violations of U.S. law by instructing customers to evade compliance controls.
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