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Update:
- Binance Holdings agreed to pay $4.3 billion as part of a proposed plea agreement with the Department of Justice (DOJ) to end claims the crypto exchange violated sanctions and engaged in money laundering and bank fraud.
- Binance founder Changpeng Zhao also resigned from the company and pleaded guilty to failing to maintain an effective anti-money laundering program.
- The settlement ends a yearslong DOJ investigation into Binance, which had been accused of violating the Bank Secrecy Act (BSA), among other things.
- Binance also agreed to settlements that would end enforcement actions by the U.S. Treasury Department and U.S. Commodities Futures Trading Commission.
- Under those proposals, Binance will pay a total of $2.7 billion, Zhao will pay $150 million and former chief compliance officer Samuel Lim will pay $1.5 million.
- Binance also reached settlements with the Treasury’s Financial Crimes Enforcement Network and the Office of Foreign Assets Control over claims it violated the BSA, among other things.
Binance unregistered crypto lawsuit overview:
- Who: The Commodity Futures Trading Commission (CFTC) has filed a lawsuit against Binance Holdings Limited, its CEO and founder Changpeng Zhao, and its COO Samuel Lim.
- Why: The CFTC claims Binance, Zhao, and Lim skirted federal registration and regulatory requirements for the cryptocurrency exchange by offering unregistered crypto and helping US customers evade compliance control the company itself set.
- Where: The lawsuit was filed in Illinois federal court.
- What are my options: Gemini is a cryptocurrency exchange alternative to Binance.
(April 10, 2023)
Binance Holdings and its founder and CEO Changpeng Zhao ignored federal registration and regulatory requirements while allegedly offering unregistered cryptocurrency on its exchange, a new lawsuit alleges.
The Commodity Futures Trading Commission (CFTC) is bringing the lawsuit against Binance, Zhao, and Chief Operating Officer Samuel Lim, whom the agency claims have been maintaining an “ineffective compliance program.”
“For years, Binance knew they were violating CFTC rules, working actively to both keep the money flowing and avoid compliance,” CFTC Chairman Rostin Behnam said, in a statement.
The CFTC argues the cryptocurrency exchange has also taken steps to help its US customers “evade the compliance controls Binance purported to implement to prevent and detect violations of U.S. law.”
Binance, the CFTC claims, has, among other things, instructed its US customers to obscure their locations, allowing them to continue submitting proof of identity and location to continue to trade — after previously announcing this was prohibited.
Binance never registered with the CFTC ‘in any capacity,’ lawsuit says
Despite this, the CFTC argues Binance has “never been registered with the CFTC in any capacity and has disregarded federal laws essential to the integrity and vitality of the U.S. financial markets.”
“Throughout the Relevant Period, and through the operation of the Binance platform, Defendants Binance, aided and abetted by Lim, and Zhao have violated core provisions of the (Commodity Exchange Act) and the (CFTC) Regulations,” the Binance lawsuit states.
The CFTC is demanding a jury trial and requesting injunctive relief along with an award of, among other things, full restitution for impacted customers or investors, and an order directing Binance to pay civil monetary penalties.
A class action lawsuit was filed against Binance.US in June 2022 by a consumer arguing the company had misled investors about the terraUSD (UST) stablecoin and its Terra blockchain ecosystem.
If you traded with Binance, you may be eligible to participate in a Binance unregistered tokens class action lawsuit investigation.
The CFTC is represented in-house by Joseph Platt, Candice Haan, Elizabeth N. Pendleton, Scott R. Williamson and Robert T. Howell.
The Binance unregistered crypto lawsuit is Commodity Futures Trading Commission v. Zhao, et al., Case No. 1:23-cv-01887, in the U.S. District Court for the Northern District of Illinois.
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