A U.S. court has ruled against prominent crypto exchange Binance and its former CEO, Changpeng “CZ” Zhao, in a landmark decision.
The court has ordered Binance to pay $2.7 billion, while CZ is personally liable for $150 million, in a case brought by the Commodity Futures Trading Commission (CFTC).
The U.S. District Court for the Northern District of Illinois approved the settlement, concluding the enforcement action initiated by the CFTC in November.
Details of the settlement
The CFTC’s statement disclosed that the court found Zhao and Binance guilty of violating the Commodity Exchange Act (CEA) and CFTC regulations.
The settlement requires Binance to disgorge $1.35 billion in illicit transaction fees and pay an equal amount as a penalty to the CFTC. The case against CZ and Binance began with a lawsuit on March 27, accusing them of evading federal laws and operating an illegal derivatives exchange.
In a separate development, on Nov. 21, CZ stepped down from his role at Binance as part of a broader settlement with the U.S. Department of Justice, Treasury Department, and CFTC. He pleaded guilty to several civil and one criminal charge related to Anti-Money Laundering laws. CZ is slated for sentencing on Feb. 23, 2024, and could face up to 18 months in prison.
As part of the settlement, both CZ and Binance agreed to implement stricter Know Your Customer measures and establish a formalized governance structure. This includes a board of directors with independent members and dedicated compliance and audit committees. Additionally, Binance’s former chief compliance officer, Samuel Lim, has been ordered to pay a $1.5 million penalty for his role in the violations.
Following CZ’s departure, Richard Teng, Binance’s former global head of regional markets, has taken over as CEO. Teng has assured investors that Binance is now fully committed to compliance and has made significant changes to its operations globally.
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…
— Richard Teng (@_RichardTeng) November 21, 2023