In a significant development, the long-standing legal battle between Binance, one of the world’s largest cryptocurrency exchanges, and the U.S. Commodity Futures Trading Commission [CFTC] has reached its conclusion. The latest update reveals that a U.S. court has given its approval to the settlement, marking the end of a contentious lawsuit.
As per the court order dated December 18, the U.S. District Court for the Northern District of Illinois has approved the settlement against Changpeng Zhao [CZ], the founder of Binance, and the exchange itself. The court mandated the crypto exchange to pay a hefty sum of $2.7 billion, while CZ personally had to pay $150 million to the CFTC. The settlement includes a consent order of permanent injunction, a civil monetary penalty, and equitable relief against both CZ and Binance.
The court formalized the settlement by finding that Zhao and the trading platform had violated the Commodity Exchange Act [CEA] and CFTC regulations. The order imposes an obligation on Zhao and Binance to provide certifications regarding the existence, application, and efficacy of Binance’s enhanced compliance controls. Furthermore, the court permanently enjoins them from committing further violations as charged.
In connection with the court order, Binance and Zhao have certified certain actions taken after the CFTC’s complaint filing. The trading firm has reportedly offboarded the quantitative trading firms identified in the complaint, as they did not meet the exchange’s improved onboarding criteria. Additionally, any customer seeking to onboard, whether through a primary or sub-account, must complete all Know Your Customer [KYC] onboarding procedures.
Binance Face Stricter Controls
The order also places additional responsibilities on Binance and Zhao, including certifications that the exchange will no longer allow existing sub-accounts to bypass compliance controls. Furthermore, the exchange is required to implement a corporate governance structure that includes a Board of Directors with independent members, a Compliance Committee, and an Audit Committee.
This legal saga began when the CFTC sued the exchange and its executive on March 27, alleging evasion of federal law and the operation of an illegal derivatives exchange. The recent settlement and related orders follow CZ’s agreement to step down from his role at Binance on November 21 as part of a broader settlement with various U.S. authorities. Zhao also pleaded guilty to civil and criminal charges related to anti-money laundering laws on the same day.