Binance and CZ to Pay Over $2.7 Billion in Fines to CFTC: Court Rules

Binance and ex-CEO Zhao face a $2.7 billion fine in a CFTC lawsuit for money laundering, with potential prison time and new CEO Richard Teng.

A recent report has revealed a new development in the CFTC lawsuit against Binance and its former CEO, ChangPeng Zhao. The court ordered the company to pay a fine of $2.7 billion while the former CEO Zhao, would individually pay a $150 million fine to the Commodity Futures Trading Commission (CFTC). This was due to a money laundering case filed against them by the CFTC.

The U.S. District Court for the Northern District of Illinois has approved the CFTC-Binance settlement, asking Binance to “disgorge $1.35 billion of ill-gotten transaction fees' and submit another $1.35 billion as a fine to the commission. The CFTC further explained that

[The court] 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).

In a separate order, the court has directed Binance's former chief compliance officer, Samuel Lim, to pay a $1.5 million civil monetary penalty. This penalty is attributed to Lim's alleged role in "aiding and abetting Binance's violations" and engaging in activities beyond the United States to deliberately evade or attempt to evade U.S. legal requirements.

In March 2023, the regulators alleged the company and its founder Zhao of “Willful Evasion of Federal Law and Operating an Illegal Digital Asset Derivatives Exchange.” Last month, Binance and Zhao pleaded guilty to breaching anti-money laundering rules following the long legal tussle with the CFTC. Agreeing to pay $4.3 billion in settlement, Zhao stepped down as the CEO, introducing the new CEO Richard Teng, the former Global Head of Binance’s Regional Markets.

Consequently, there have been reports about a potential prison sentence that could span up to 10 years for Zhao. While Zhao had plans to return to his family in the UAE, the court filing prohibited him from such a move, claiming he posed a “flight risk.” Quoting the court ruling, the former Securities and Exchange Commission (SEC) official John Reed Stark posted on X, “The defense claims that Mr. Zhao faces merely a “brief” sentence and has no incentive to flee.”