In a significant development in the cryptocurrency industry, Binance and CZ, one of the world’s largest and most influential crypto exchanges, and its former CEO Changpeng Zhao (popularly known as CZ) respectively, have been ordered to pay over $2.7 billion. This comes as a result of a settlement with the U.S. Commodity Futures Trading Commission (CFTC).
On December 18, 2023, the Commodity Futures Trading Commission (CFTC) made a public statement that the U.S. District Court for the Northern District of Illinois has approved a consent order that was previously suggested, which involves Binance and its ex-CEO.
As part of the order, Binance is required to return $1.3 billion in transaction fees that were improperly obtained and pay an additional $1.3 billion as a civil penalty to the regulatory body. Changpeng Zhao, the former CEO, is personally liable for a civil penalty amounting to $150 million.
The CFTC Leveled Serious Accusations Against Binance and CZ
The CFTC has stated that Binance, along with its former CEO Zhao, ran a platform for futures and options that was not registered. This platform provided U.S. customers with the ability to trade in cryptocurrency derivatives, but it did not adhere to the CFTC’s rules regarding customer protection, market integrity, and anti-fraud.
Furthermore, the CFTC has leveled accusations against Binance and Zhao for their lack of sufficient measures to deter money laundering, terrorist financing, and other unlawful activities associated with digital assets. Binance and Zhao are required to carry out an extensive reform of their corporate governance. This includes the establishment of a board of directors made up of independent individuals, as well as the formation of a compliance committee and an audit committee.
Apart from its ongoing legal issues with the CFTC, Binance is also engaged in a legal dispute with the Securities and Exchange Commission (SEC). The SEC had leveled accusations of securities violations against the company in June. In response, Binance has initiated legal proceedings to have the SEC’s claims dismissed.