Binance And Changpeng Zhao Fined IDR 66 Trillion By US CFTC

Changpeng Zhao, founder of the Binance crypto exchange. (Photo; Doc. Cryptakias)

JAKARTA - The world's largest crypto exchange, Binance, and its former founder and CEO, Changpeng Zhao, have to pay billions of US dollars in fines for violating commodity trade laws in the United States (US). This was announced by the US Futures Trading Commission (CFTC), after the US District Court for the Northern District of Illinois approved and registered a previously agreed settlement.

According to a court order, Zhao had to pay a fine of $150 million (IDR 2.33 trillion), while Binance had to pay $1.35 billion (IDR 20.93 trillion) from transaction fees obtained through illegal activities, plus an additional fine of $1.35 billion (IDR 20.93 trillion). The total fines paid by Binance and Zhao reached $2.85 billion (IDR 44.19 trillion).

The Illinois Northern District Court stated that Binance and Zhao violated commodity trade laws by deliberately recruiting US customers without proper control.

"Binance, at Zhao's direction, actively recruits customers in the US, including a quantitative trading company, which performs direct digital asset derivative transactions on the Binance platform. Violating the Provisions for its own use, Binance also allows at least two major brokers to open'sub-accounts' that are not subject to Binance's customer recognition (KYC) procedures and allow US customers to trade directly on the platform," the court announcement reads.

As part of the settlement, Binance and Zhao are committed to improving compliance procedures to identify banned US customers. They have revoked the list of US trading companies mentioned in the original CFTC complaint for not meeting the upgraded requirements.

The exchange also approved implementing enhanced corporate governance with independent board directors, an audit committee, and compliance team. A separate order imposed a fine of $1.5 million (Rp23.26 billion) to the former head of Binance's compliance officer for his assistance in the embezzlement effort.

This settlement comes amid growing regulatory pressures faced by Binance and other major crypto exchanges operating in the US. This follows the settlement of Binance US, the US company Binance, with FinCEN over a fine of $3.4 billion (IDR 52.72 trillion) and a fine of $698 million (IDR 15 trillion) from OFAC to resolve sanctions violations earlier this month.

Meanwhile, the Securities and Exchange Commission is continuing its investigation into Binance, which was launched at the end of 2022, regarding securities transactions. This situation creates uncertainty for the crypto industry and highlights the importance of structural change in the Binance ecosystem.