Binance Settles with CFTC, Agrees to $2.7 Billion Fine; CZ to Pay $150 Million

Binance has been directed by the U.S. Court to settle a lawsuit by paying a $2.7 billion penalty to the CFTC. As part of the resolution, Changpeng Zhao is obligated to contribute $150 million in fines for money laundering, a requirement stemming from his admission of guilt in the $4.3 billion settlement reached in November.

In the latest developments, the U.S. court has taken action against both Binance and its former CEO, Changpeng Zhao, in the CFTC lawsuit. The court has mandated the company to settle by paying a $2.7 billion fine, and individually, Zhao is required to pay $150 million to the Commodity Futures Trading Commission (CFTC). These measures were implemented in response to a money laundering case filed by the CFTC.

In an official statement released by the CFTC, it has been disclosed that the U.S. District Court for the Northern District of Illinois has given its approval to the settlement between the CFTC and Binance. The court has directed Binance to “disgorge $1.35 billion of ill-gotten transaction fees” and additionally imposed a $1.35 billion fine to be remitted to the commission. The CFTC provided further clarification on the court’s decision, emphasizing the financial consequences for Binance.

The court has officially endorsed the settlement as previously disclosed and issued a consent order that includes a permanent injunction, civil monetary penalty, and equitable relief against Changpeng Zhao and his affiliated companies—Binance Holdings Limited, Binance Holdings (IE) Limited, and Binance (Services) Holdings Limited, collectively referred to as Binance.

In March 2023, regulatory authorities accused the company and its founder, Zhao, of “Willful Evasion of Federal Law and Operating an Illegal Digital Asset Derivatives Exchange.” Subsequently, Binance and Zhao admitted guilt last month for violating anti-money laundering regulations after an extensive legal dispute with the CFTC. As part of a $4.3 billion settlement, Zhao resigned from his position as CEO, and the new CEO, Richard Teng, formerly the Global Head of Binance’s Regional Markets, was introduced.

As a result, recent reports indicate the possibility of a prison sentence for Zhao, potentially extending up to 10 years. Despite Zhao’s intention to return to the UAE to reunite with his family, the court filing has imposed restrictions, citing concerns about a “flight risk.” Quoting the court ruling, former Securities and Exchange Commission (SEC) official John Reed Stark shared on X, “The defense argues that Mr. Zhao is expected to face only a ‘brief’ sentence and lacks motivation to flee.”