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Binance and Zhao’s Fines Approved: Is There a Way Back For Exchange?

Last Updated December 19, 2023 11:50 AM
Teuta Franjkovic
Last Updated December 19, 2023 11:50 AM

Key Takeaways

  • An American court’s penalty against Binance, with an additional fine for Changpeng Zhao, is a legal milestone.
  • Admitting “historical crimes,” Binance and Zhao revealed anti-money laundering and sanctions lapses.
  • Despite the penalty, Binance aims to clean up act and boost compliance.

In the wake of charges brought by the United States government, Binance is actively working to recover its regulatory standing.

Earlier this month, the exchange reached a settlement with the Department of Justice. It is now in the process of settling with the Commodity Futures Trading Commission (CFTC). This could mark a pivotal moment in Binance’s efforts to navigate and comply with stringent regulatory landscapes.

Billions in Penalties Mark Major Blow for Crypto Exchange

A US court has confirmed a substantial penalty  against cryptocurrency exchange Binance and its former CEO, Changpeng Zhao, following a money laundering case initiated by the U.S. Commodity Futures Trading Commission (CFTC).

According to the CFTC’s announcement  on Monday, Zhao is ordered to pay $150 million, while Binance faces a fine of $2.7 billion. The US District Court for the Northern District of Illinois formalized the decision. It approved  the settlement and issued a consent order for permanent injunction. Not only that, but it also issued along with a civil monetary penalty and equitable relief against both Zhao and Binance.

The settlement represents one of the most significant legal actions in the crypto industry, particularly concerning compliance with U.S. financial regulations.

The court has levied a substantial financial penalty in the Binance case, with Changpeng Zhao personally facing a $150 million civil monetary penalty.

Additionally, Binance is mandated to forfeit $1.35 billion in transaction fees identified as illicitly obtained, and to pay an equivalent amount, another $1.35 billion, as a penalty to the Commodity Futures Trading Commission (CFTC).

Child Abuse & Ransomware Funds

According to the legal documents , Zhao and Binance faced charges for deliberately violating U.S. regulatory standards and for concealing the activity of American users on their platform.

To prevent such incidents in the future, the CFTC has ordered Binance to close sub-accounts on its platform. This directive is part of the CFTC’s broader requirements aimed at ensuring regulatory compliance and enhancing operational transparency within Binance.

The CFTC said :

“After applying all KYC policies and procedures to all existing sub-accounts, Binance will offboard every account that fails to meet its compliance controls. In addition, the 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.”

Binance, in response to the court’s ruling, acknowledged its past shortcomings, stating that the resolutions recognized the company’s responsibility for “historical, criminal compliance violations,” and signified an opportunity for the company to move forward.

The authorities have reported that Binance breached U.S. anti-money laundering and sanctions laws. Most notably, it neglected to report more than 100,000 suspicious transactions, including some involving terrorist groups. Furthermore, the exchange was did not report dealings with websites involved in distributing child sexual abuse material.

Additionally, Binance was identified as one of the largest recipients of funds from ransomware attacks. This highlighted serious lapses in the company’s compliance and operational protocols, the authorities claim.

BNB Price Stays Stable Amidst the CFTC Settlement

The Binance Coin (BNB) price response to the recent CFTC settlement was notably different from its reaction to the charges announced by the Department of Defense.

In the last 24 hours, BNB’s price has remained relatively stable, trading around $245  at the time of writing (December 19 2023). The altcoin has not managed to break the $255 barrier, which has been in place for about six weeks. It has, however, consistently found support at the $231 level. Should the broader market shift upwards in the coming weeks and BNB breaks through this resistance, it could potentially rise to $264. This would be its best price in six months.  This scenario hinges on market dynamics and Binance’s ongoing regulatory developments.

BNB coin
Credit: TradingView

The current price indicators for Binance Coin (BNB) hint at a short-term rise. This will rely on the absence of significant bearish factors. However, considering the recent legal challenges faced by Binance and CEO Changpeng Zhao, there’s a potential risk of bearish sentiment.

If Binance Coin encounters such bearishness, it may test the $231 level as a crucial support point. A failure to maintain this support could lead to a decline in BNB’s price, potentially dropping to around $219. Such a scenario would negate the bullish outlook. It would also demonstrate how sensitive the coin was to both market trends and the ongoing legal situation.

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