KEY POINTS
- The court order formalizes the settlement agreement initially announced on Nov. 21
- That agreement imposed a $150 million civil monetary penalty against Zhao
- It also required a $1.35 billion ill-gotten transaction fee and a $1.35 billion penalty for Binance
The Commodity Futures Trading Commission (CFTC) announced on Monday that it is ending its enforcement action, as a U.S. court entered an order against Binance and its founder Changpeng Zhao (CZ) that would see both pay $2.7 billion and $150 million, respectively.
"U.S. District Court for the Northern District of Illinois has approved the previously announced settlement and entered a consent order of permanent injunction, civil monetary penalty and equitable relief against Changpeng Zhao and his companies Binance Holdings Limited, Binance Holdings (IE) Limited and Binance (Services) Holdings Limited (together, Binance)," CFTC said in a press release.
The court order formalizes the settlement agreement that was first announced on Nov. 21, which imposed a $150 million civil monetary penalty against Zhao, a $1.35 billion ill-gotten transaction fee and a $1.35 billion penalty for Binance.
Aside from the payment of fines, the court order also obligates Binance and Zhao to issue certifications on the existence of the application and efficacy of improved compliance control of Binance, the world's largest centralized crypto exchange platform by trading volume, and "permanently enjoins them from further violations as charged."
Moreover, the court order "requires Binance and Zhao to certify Binance will implement a corporate governance structure that includes a Board of Directors with independent members, a Compliance Committee and an Audit Committee."
In a separate court order, Judge Manish S. Shah required Samuel Lim, Binance's former chief compliance officer, to pay a $1.5 million civil monetary penalty for aiding and abetting Binance's violations and engaging in activities outside of the U. S. to willfully evade or attempt to evade U.S. law.
The approved settlement concludes the long-running case the CFTC filed against Zhao and Binance on March 27 for allegedly evading federal law and operating an illegal derivatives exchange platform.
Zhao pleaded guilty to several civil charges and one criminal charge relating to Anti-Money Laundering laws on Nov. 21 and agreed to give up his position as the CEO of the crypto exchange platform he founded as part of the settlement agreement with the U.S. Department of Justice (DOJ), the Treasury Department and the CFTC.
Earlier this month, District Judge Richard Jones of the Western District of Washington sided with the DOJ and granted its motion to prevent Zhao from returning to his residence in the United Arab Emirates (UAE) before his sentencing in February 2024.
The judge noted that "based on the foregoing reason, the Court GRANTS the government's motion, and the defendant shall remain in the continental United States during the period between his plea and sentencing."
"The court agrees with the government that this is an unusual case. The defendant has enormous wealth and property abroad, and no ties to the United States. His family resides in the UAE and it appears that he has favored status in the UAE," the judge's decision read.
