In a groundbreaking conclusion to a legal saga, Binance, one of the world’s major cryptocurrency exchanges, along with its founder Changpeng Zhao (CZ), has settled with the US Commodity Futures Trading Commission (CFTC) in a historic $3 billion resolution. This resolution marks the end of a contentious battle over alleged regulatory infractions.

The settlement, finalized on December 18, 2023, by the United States District Court for the Northern District of Illinois, outlines significant financial penalties. Binance is set to disgorge $1.3 billion in ill-gotten transaction fees and pay an equal amount as a civil monetary penalty. Additionally, CZ will personally contribute $150 million to the regulatory body, underscoring the gravity of the resolution.

The CFTC’s case, initiated in March with a lawsuit against Binance and CZ, accused the exchange of soliciting US customers while sidestepping regulatory obligations. Allegations also implicated Binance executives in aiding US clients to evade compliance protocols.

Throughout the legal battle, CZ contested the accusations, while Binance sought to dismiss the case, contending that the CFTC overstepped its jurisdiction by regulating foreign entities operating beyond US borders.

The resolution mandates Binance to revamp its corporate governance, including the formation of a Board of Directors with independent members, a Compliance Committee, and an Audit Committee. This structural overhaul aims to fortify regulatory compliance within the exchange’s operations.

The settlement arrives amidst ongoing legal entanglements for Binance. In a separate development, CZ stepped down from his CEO position in November 2023, admitting fault in violating anti-money laundering regulations. His relinquishment extended to his chairmanship at Binance.com, the American arm of the exchange.

Awaiting sentencing on February 23, 2024, CZ faces a potential maximum of 18 months in prison, following a recent court ruling that requires him to remain in the US.

The colossal settlement, announced recently by the CFTC, sees Binance committing to disgorge $2.7 billion in a combination of penalties and ill-gotten transaction fees. Within this total sum, $1.3 billion constitutes a disgorgement of the accrued transaction fees, while an equal amount accounts for a civil monetary penalty levied against the exchange. Additionally, CZ, the erstwhile CEO, will personally pay a substantial $150 million fine to the regulatory body.

This pivotal development arrives following the CFTC’s lawsuit earlier this year, alleging a spectrum of violations by Binance and Zhao. Among the accusations were claims of actively targeting U.S. customers while disregarding the nation’s regulatory stipulations. Furthermore, the regulator contended that Binance, Zhao, and other high-ranking executives facilitated American clients in bypassing compliance protocols.

However, amid denials from the former CEO and attempts by Binance to dismiss the case on jurisdictional grounds, the recent consent order, entered by the United States District Court for the Northern District of Illinois, brings a definitive conclusion to all allegations raised by the CFTC against the exchange and its former CEO.

In addition to the hefty financial penalties, the order mandates Binance and Zhao to implement a robust corporate governance structure. This includes the establishment of a Board of Directors with independent members, a Compliance Committee, and an Audit Committee—a move aimed at enhancing regulatory compliance and oversight within the exchange.

Prior to this settlement with the CFTC, Binance had reached a staggering $4.3 billion agreement with the US Department of Justice (DOJ), acknowledging breaches of the Bank Secrecy Act and other violations. The DOJ, in a statement, indicated coordinated resolutions with various regulatory bodies, including the Financial Crimes Enforcement Network (FinCEN) and the Office of Foreign Assets Control (OFAC).

This resolution’s reverberations are expected to resonate across the crypto landscape, with analysts and industry observers closely monitoring the implications for Binance’s future operations and regulatory compliance.