Crypto
exchange
Binance
and
its
founder,
Changpeng
“CZ”
Zhao,
agreed
to
pay
nearly
$3
billion
to
settle
the
U.S.
Commodity
Futures
Trading
Commission
lawsuit
against
it,
including
a
$1.35
billion
fine
that
is
the
largest
ever
secured
by
the
regulator.
This
builds
on
separate
settlements
Tuesday
with
the
U.S.
Department
of
Justice
and
Treasury
Department,
which
also
called
Binance’s
penalties
the
largest
ever
targeted
at
a
single
corporation.
The
CFTC
sued
Binance
earlier
this
year,
alleging
that
the
exchange
offered
unregistered
crypto
derivatives
products
in
the
U.S.
despite
knowing
that
was
against
the
law.
The
suit
highlighted
the
“maze
of
corporate
entities”
Binance
had,
which
an
official
said
demonstrated
the
exchange’s
“willful
evasion
of
U.S.
law.”
In
a
press
conference
Tuesday,
CFTC
Chair
Rostin
Behnam
said
the
exchange’s
actions
“undermined
the
foundation
of
safe
and
sound
financial
markets”
while
collecting
$1.35
billion
in
trading
fees.
“As
evidenced
by
the
internal
chats
of
Binance’s
CCO
and
others,
Binance
recognized
that
its
platform
was
used
to
facilitate
criminal
activity,
including
terrorist
financing,
but
chose
to
turn
a
blind
eye,
all
in
the
name
of
profits,”
Behnam
said.
“Binance
and
its
leaders
sought
to
dupe
and
indoctrinate
their
employees
and
customers,
building
a
cult-like
following
premised
on
circumventing
their
own
compliance
controls
to
maximize
corporate
profits
above
all
else.”
Samuel
Lim,
the
former
chief
compliance
officer,
will
pay
$1.5
million
as
well
if
a
federal
judge
signs
off
on
the
proposed
settlements.
He
is
also
banned
from
acting
as
an
unregistered
futures
commission
merchant
or
operating
any
illegal
crypto
derivatives
platforms,
the
regulator
said.
Going
after
a
company’s
compliance
chief
marked
a
novel
enforcement
move
for
the
CFTC,
according
to
Commissioner
Caroline
Pham.
She
noted
the
U.S.
Securities
and
Exchange
Commission
(SEC)
has
pursued
such
officials
before,
but
this
is
“the
first
time
that
the
CFTC
is
charging
a
compliance
officer
with
individual
liability.”
“I
believe
that
the
alleged
facts
involving
egregious
personal
conduct
demonstrate
that
the
defendant
employee
was
‘compliance
in
name
only,'”
Pham
said
in
a
statement
on
Tuesday.
“I
support
sending
this
strong
message
to
the
crypto
asset
sector,
which
has
all
too
often
demonstrated
material
weaknesses
in
both
their
compliance
programs
and
their
risk
management
programs.”
Behnam
also
noted
how
quickly
the
agency
resolved
its
major
enforcement
action
against
Binance
and
its
former
CEO.
“The
resolution
of
the
action
against
Binance
and
Zhao
–
within
just
8
months
of
its
filing
–
solidifies
the
CFTC’s
reputation
as
the
proven
leader
in
the
civil
enforcement
space
when
it
comes
to
digital
assets,”
the
chairman
said.
“We
are
stalwart
in
ensuring
CFTC
registrants
comply
with
our
statute
and
regulations,
which
serve
to
protect
broader
financial
health
and
that
directly
impacts
millions
of
American
investors.”
Unfortunately
for
Binance,
the
SEC
is
still
pursuing
its
similar
but
separate
action
against
the
exchange,
which
this
week’s
multi-headed
government
deal
didn’t
satisfy.
UPDATE
(November
21,
2023,
00:40
UTC):
Adds
status
as
record
CFTC
fine
and
comment
from
Commissioner
Pham.