Binance Settles with CFTC: $2.7 Billion in Disgorgement and Penalties

Binance has agreed to pay $2.7 billion in disgorgement and penalties to the Commodity Futures Trading Commission (CFTC), effectively bringing an end to the regulatory action against the company.

On December 18, 2023, the CFTC made an official press release, disclosing that the United States District Court for the Northern District of Illinois has entered a consent order against Binance and its former CEO, Changpeng Zhao (CZ).

The breakdown of the settlement involves Binance disgorging $1.3 billion of ill-gotten transaction fees and an additional $1.3 billion as a civil monetary penalty. Simultaneously, CZ, the founder and former CEO, will personally pay a civil monetary penalty of $150 million to the regulatory watchdog.

Binance Legal Saga

The legal saga began in March when the CFTC filed a lawsuit, accusing Binance and Zhao of various allegations, including soliciting U.S. customers and circumventing regulatory requirements. Despite refuting the accusations, Zhao and Binance faced an uphill battle.

As part of the settlement, the exchange and Zhao are mandated to implement a corporate governance structure. This includes the establishment of a Board of Directors with independent members, a Compliance Committee, and an Audit Committee.

CZ’s Departure and Legal Consequences

In November 2023, Zhao stepped down as Binance’s CEO and pleaded guilty to violating anti-money laundering rules. Facing a potential 18-month prison sentence, CZ will stay in the U.S. until his sentencing on February 23, 2024, following a recent court ruling.

Aside from the CFTC settlement, the exchange has also reached a $4.3 billion settlement with the U.S. Department of Justice (DOJ) for violating the Bank Secrecy Act. The exchange is concurrently entangled in a legal dispute with the Securities and Exchange Commission (SEC) over alleged securities violations, filing a lawsuit to dismiss the SEC’s allegations in June.