Binance and CZ pay billions in settlement with CFTC

abdelaziz Fathi

The U.S. District Court for the Northern District of Illinois has approved a settlement requiring Binance and its former CEO, Changpeng “CZ” Zhao to pay hefty fines to the Commodity Futures Trading Commission (CFTC).

The court’s decision mandates Binance to disgorge $1.35 billion obtained from transaction fees and to pay an additional $1.35 billion as a civil penalty to the CFTC. Additionally, CZ was hit personally with a $150 million civil monetary penalty.

This resolution is the culmination of a case initiated by the CFTC against Zhao and Binance on March 27. The agency’s lawsuit accused the executive and his exchange of evading federal law and operating an illegal derivatives exchange. The settlement, initially reached in late November, was finalized with the court’s recent approval.

The CFTC’s statement on December 18 confirmed the court’s approval of the settlement and the conclusion of this enforcement action, which marks the end of a long-running legal battle.

Binance previously tried to dismiss the lawsuit, arguing that the CFTC is overstepping its jurisdictional boundaries by attempting to regulate foreign entities operating outside the United States. Binance criticized the CFTC’s effort to expand its authority beyond the confines of the U.S. Commodity Exchange Act.

The cryptocurrency exchange further highlighted that the CFTC introduced broadened arguments and redefined the term “U.S. person”, suggesting the regulator was seeking global control over any activity related to derivatives products in the crypto domain.

Earlier this month, a U.S. district judge accepted a guilty plea from CZ on charges related to anti-money laundering violations.

CZ pleaded guilty last month to anti-money laundering and sanctions violations following years-long probes by federal regulators. As part of a settlement, Binance, the cryptocurrency exchange he co-founded, agreed to pay $4.3 billion, making it one of the largest corporate settlements in history. Additionally, CZ agreed to pay a $50 million fine and stepped down as CEO of Binance.

With a potential maximum prison sentence of 18 months as per federal guidelines, Zhao has committed not to appeal any sentence up to that duration. However, it wasn’t decided whether CZ can leave the United States before his sentencing, which is scheduled for February 23, 2024. He currently resides in the United Arab Emirates (UAE), and federal prosecutors have objected to allowing him to leave the United States. They said that Zhao poses a flight risk due to his substantial wealth and the fact that the UAE, where he resides, does not have an extradition treaty with the U.S. CZ is released on a $175 million bond.

Zhao’s defense argues that he does not pose a flight risk, as previously determined by Judge Brian Tsuchida, and that the government has not provided adequate grounds for an appeal to overturn this finding. They elaborated on CZ’s visibility as a global public figure and his track record, including a lack of criminal history and the non-violent nature of his offenses, to argue against the necessity of him staying in the U.S. before sentencing.

  • Read this next

    Retail FX

    Weekly Roundup: FX prop firms switch to cTrader, who moved $1.35B BTC?

    The foreign exchange and cryptocurrency markets are always active, and this past week was no exception. Stay ahead with a selection of essential stories and updates that matter most to market participants.

    Digital Assets

    Bitcoin breaks all records with a massive $1.347 billion transaction

    This transaction has surpassed previous records, setting a new benchmark for Bitcoin trades. Before this event, the largest Bitcoin transactions included a $1.1 billion trade in April 2020 involving 161,500 BTC, and other significant transactions ranging from $491 million to $1.033 billion throughout 2019 and 2020.

    Digital Assets

    Uniswap debuts Ethereum ‘uni.eth’ subdomains

    Decentralized exchange platform Uniswap has integrated Ethereum Name Service (ENS), allowing users to create human-readable domain names and cryptocurrency wallet addresses using .eth endings.

    Web3

    Magic Square Expands with TruePNL Acquisition

    Binance’s web3 app store, Magic Square, acquired token platform TruePNL in a cash deal this week for an undisclosed sum. The deal brings TruePNL’s infrastructure (excluding branding & token) under Magic Square’s wing. Initially seeking a partnership, Magic Square opted for a full acquisition.

    Crypto Insider

    The Future of Prediction Markets? Zeitgeist Launches Decentralized Court System

    Polkadot-powered prediction market protocol Zeitgeist has announced the launch of its latest innovation: a decentralized court system.

    Digital Assets

    Crypto exchange Kraken fires back at SEC lawsuit, claiming overreach

    Crypto exchange Kraken is pushing back against the U.S. Securities and Exchange Commission (SEC), seeking to toss out a lawsuit that accused the platform of operating without proper registration.

    Industry News

    Exness Named a Best Place to Work in 2024

     Global leader Exness, tops in retail trading volume, earns 2024 “Best Place to Work” award, cementing its employee-centric culture after three prior years of winning the Cyprus national title.

    Digital Assets

    Swan Bitcoin taps Bakkt for crypto offering in the US

    “We are thrilled to be taking this exciting step forward in our partnership with Swan. This is just the beginning of our collaboration, as we intend to explore further growth opportunities together in the future, including expansion into international markets.”

    Digital Assets

    Polkadot Awards Bifrost a 500,000 DOT Loan to Enhance Liquid Staking Adoption

    Bifrost, a leader in liquid staking solutions, has secured a 500,000 DOT loan from Polkadot’s treasury to expand the reach and utility of its vDOT product within the ecosystem.

    <