Release Number 8837-23
Federal Court Enters Order Against Binance and Former CEO, Zhao, Concluding CFTC Enforcement Action
Zhao to Pay $150 Million and Binance to Pay $2.7 Billion to CFTC
December 18, 2023
Washington, D.C. – The Commodity Futures Trading Commission today announced the U.S. District Court for the Northern District of Illinois has approved the previously announced settlement and entered a consent order of permanent injunction, civil monetary penalty, and equitable relief against Changpeng Zhao and his companies Binance Holdings Limited, Binance Holdings (IE) Limited, and Binance (Services) Holdings Limited (together, Binance). In formalizing the settlement initially announced on November 21 [See CFTC Press Release No. 8825-23], the court finds Zhao and Binance violated the Commodity Exchange Act (CEA) and CFTC regulations, imposes a $150 million civil monetary penalty personally against Zhao, and requires Binance to disgorge $1.35 billion of ill-gotten transaction fees and pay a $1.35 billion penalty to the CFTC. 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. [See CFTC Press Release No. 8680-23]
Case Background
As previously announced, the order finds Binance, at Zhao’s direction, actively solicited customers in the United States, including quantitative trading firms, who entered into digital asset derivative transactions directly on the Binance platform. In violation of its own Terms of Use, Binance also allowed at least two prime brokers to open “sub-accounts” that were not subject to Binance’s know your customer (KYC) procedures and enabled U.S. customers to directly trade on the platform. The order further finds Zhao and Binance were aware of U.S. regulatory requirements, but chose to ignore them and knowingly concealed the presence of U.S. customers on the platform. The order also finds Zhao and other members of Binance’s senior management actively facilitated violations of U.S. law, including instructing U.S. customers to evade compliance controls.
In connection with the order, Binance and Zhao have certified that, subsequent to the filing of the CFTC’s complaint, Binance has offboarded the quantitative trading firms identified in the CFTC’s complaint as they do not meet Binance’s improved onboarding criteria. Binance and Zhao also certified that any customer who seeks to onboard, whether through a primary or “sub account,” must complete all KYC onboarding procedures. The order requires Binance and Zhao to make additional certifications, including that Binance will no longer allow existing sub-accounts, including those opened by prime brokers, to bypass the platform’s compliance controls. Also, after applying all KYC policies and procedures to all existing sub-accounts, Binance will offboard every account that fails to meet its compliance controls. In addition, the order requires Binance and Zhao to certify Binance will implement a corporate governance structure that includes a Board of Directors with independent members, a Compliance Committee, and an Audit Committee.
A separate order, also issued by Judge Manish S. Shah, requires Binance’s former Chief Compliance Officer Samuel Lim to pay a $1.5 million civil monetary penalty for aiding and abetting Binance’s violations and engaging in activities outside of the U. S. to willfully evade or attempt to evade U.S. law.
The Division of Enforcement staff responsible for this matter are Candy Haan, Joseph Platt, Joseph Patrick, Katherine Paulson, Matthew Edelstein, Ray Lavko, William P. Janulis, Margaret Aisenbrey, Elizabeth N. Pendleton, Scott R. Williamson, and Robert T. Howell.
-CFTC-
11 HOURS AGO
US court approves settlement against Binance, firm to pay $2.7B to CFTC
Former Binance CEO Changpeng “CZ” Zhao has been ordered to pay $150 million, while Binance will pay $2.7 billion to conclude the CFTC enforcement action.
A United States court has entered an order against crypto exchange Binance and its former CEO, Changpeng “CZ” Zhao, that will see Binance pay $2.7 billion and CZ pay $150 million to the Commodity Futures Trading Commission (CFTC).
In a Dec. 18 statement, the CFTC announced that the U.S. District Court for the Northern District of Illinois had approved the previously announced settlement and concluded the enforcement action first issued by the CFTC in November.
“The court finds Zhao and Binance violated the Commodity Exchange Act (CEA) and CFTC regulations, imposes a $150 million civil monetary penalty personally against Zhao, and requires Binance to disgorge $1.35 billion of ill-gotten transaction fees and pay a $1.35 billion penalty to the CFTC,” wrote the CFTC in a statement.
CFTC @CFTC
Federal Court Enters Order Against Binance and Former CEO, Zhao, Concluding CFTC Enforcement Action: https://www.cftc.gov/PressRoom/PressReleases/8837-23
6:02 AM · Dec 19, 2023
The approved settlement marks the conclusion of a long-running case against CZ and Binance by the CFTC. The agency sued the executive and his exchange on March 27 for evading federal law and operating an illegal derivatives exchange.
On Nov. 21, CZ agreed to step down from his role at the helm of Binance as part of a wider settlement with the U.S. Department of Justice, the Treasury Department and the CFTC. On the same day, Zhao pleaded guilty to several civil charges and one criminal charge relating to Anti-Money Laundering laws.
On Dec. 7, CZ was ordered to remain in the U.S. until his Feb. 23, 2024 sentencing date. He faces up to 18 months in prison on money laundering charges and has agreed not to appeal any potential sentence up to that length.
As part of the settlement, both CZ and Binance have agreed to take further steps to ensure Know Your Customer measures are maintained on the exchange as well as requiring Binance to implement a formalized corporate governance structure, including a board of directors with independent members, a compliance committee and an audit committee.
The court also made a separate order for Binance’s former chief compliance officer, Samuel Lim, to pay a $1.5 million civil monetary penalty for “aiding and abetting Binance’s violations and engaging in activities outside of the U. S. to willfully evade or attempt to evade U.S. law.”
CZ was succeeded as CEO by Binance’s former global head of regional markets, Richard Teng.
Richard Teng @_RichardTeng
It is an honour and with the deepest humility that I step into the role of Binance’s new CEO.
We operate the world’s largest cryptocurrency exchange by volume. The trust placed on us by our 150m users and thousands of employees is a responsibility that I take seriously and hold dear.
With CZ, and our leadership team’s support, I have accepted this role so that we can continue to meet and exceed the expectations of stakeholders while achieving our core mission, the freedom of money.
The foundation on which Binance stands today is stronger than ever.
To ensure a bright future, I intend to use everything I’ve learned over the past three decades of financial services and regulatory experience to guide our remarkable, innovative, and committed team.
My focus will be on:
1) reassuring users that they can remain confident in the financial strength, security and safety of the company
2) collaborating with regulators to uphold high standards globally that foster innovation while providing important consumer protections
3) working with partners to drive growth and adoption of Web3
We are here to stay. Please lend me your support. Excited for the days ahead!
4:47 AM · Nov 22, 2023
In an interview with Cointelegraph on Dec. 5, Teng described Binance as being “totally different,” assuring investors that the days of having “gaps in compliance” were now firmly behind it. Teng said that moving forward, Binance was heavily invested in ensuring compliance with regulatory agencies from around the globe.
Over the past 18 months, Binance has been forced to terminate or significantly adjust its core services in several jurisdictions around the globe — including the Netherlands, Cyprus, Australia and Canada.
「和解協議」獲法院批准：幣安將向美國 CFTC 支付 27 億美元
法院近日正式批准了美國商品期貨交易委員會（CFTC）與幣安先前宣布的和解協議，要求幣安向 CFTC 支付 27 億美元，並對趙長鵬處以 1.5 以美元的罰款。
2023-12-19 閱讀時間： 約 1 分鐘
在幣安（Binance）及其創辦人趙長鵬（CZ）承認違反洗錢規定等指控之後，法院近日正式批准了美國商品期貨交易委員會（CFTC）與幣安先前宣布的和解協議，要求幣安向 CFTC 支付 27 億美元，並對趙長鵬處以 1.5 以美元的罰款。
CFTC 今（19）日宣布，美國伊利諾州北區地方法院已批准了之前宣布的和解協議，同時還簽署了針對趙長鵬及其公司 Binance Holdings Limited、Binance Holdings （IE）Limited 和 Binance（Services）Holdings Limited 的禁令和民事罰款。CFTC 透過聲明指出：
法院認定趙長鵬和幣安違反了《商品交易法》（CEA）和 CFTC 規定，對趙長鵬個人處以 1.5 億美元的民事罰款（其中三分之一需在接下來的 30 天內支付），要求幣安返還透過非法手段獲取的 13.5 億美元交易費用，並向 CFTC 支付 13.5 億美元的罰款。
CFTC 表示，幣安在前執行長趙長鵬的指示下，積極招攬美國客戶，包含允許量化交易公司直接在平台上進行加密貨幣衍生性商品交易。此外，幣安也違反了自身的使用條款，至少允許兩家經紀商開設無需經過 KYC 實名認證的「子帳戶」，並允許美國客戶直接在該平台上進行交易。CFTC 表示，趙長鵬和幣安在對美國監管要求具備充分了解的情況下，卻選擇忽視這些要求，甚至還刻意隱瞞美國用戶的存在。
目前，幣安已將 CFTC 所指定的量化交易公司從平台上剔除。幣安和趙長鵬還承諾，無論是透過主帳戶還是「子帳戶」，任何新加入的客戶都必須完成所有 KYC 實名認證程序，也不再允許現有子帳戶（包括主要經紀商開設的子帳戶）繞過平台的合規控制措施，並關閉所有未能滿足合規控制要求的帳戶。
此外，法院命令還要求趙長鵬和幣安對公司改進合規控制措施的情況進行認證，並永久禁止他們進一步違規。趙長鵬和幣安必須確保公司將實施具有「獨立成員的董事會、合規委員會和審計委員會」的治理架構。
與此同時，法院還發布了另一項獨立的命令，要求幣安前合規長 Samuel Lim 支付 150 萬美元的民事罰款，罪名是協助和教唆幣安違規以及在美國境外參與故意逃避或試圖逃避美國法律的活動。
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