Why Did Binance Exchange Pay a $4.3 Billion Penalty? – Coinpedia Fintech NewsDecember 6, 2023
Binance, the world’s largest cryptocurrency exchange, received a multi-billion dollar penalty from the US Commodity Futures Trading Commission (CFTC), and Commissioner Kristen Johnson shed light on the reasons behind the heightened penalty.
As reported by Coindesk, Johnson clarified during a Tuesday event hosted by the Financial Times that the CFTC took enforcement action against Binance not due to alleged misconduct but for its failure to comply with regulations.
The CFTC’s multi-billion dollar penalties, part of one of the largest fines in corporate history, were intensified due to the regulator’s prior warnings to crypto firms to ensure compliance. Last month, Binance agreed to pay $4.3 billion to the CFTC, the Department of Justice, and other US government agencies, settling charges related to money laundering and other offenses.
As part of the deal, Binance agreed to pay $1.35 billion in civil penalties and another $1.35 billion in disgorgement to the CFTC to resolve a March lawsuit.
The lawsuit claimed that Binance operated an unlicensed crypto derivatives trading platform in the US and attempted to conceal it from regulators. Binance founder Changpeng Zhao stepped down and paid a $150 million fine as part of the settlement.
Commissioner Johnson said that the CFTC’s action against Binance did not involve allegations of fraud or similar misconduct. Instead, it was about rule-breaking. She noted that the agency had a thorough methodology for deciding civil penalties, and Binance’s penalties were heightened because the CFTC had consistently emphasized the need for compliance.
While acknowledging concerns in the crypto industry about regulatory actions lacking clarity, Johnson stressed the importance of compliance for market participants.
She stated, “We are excited for market participants to operate in our market, but it’s critical that if you’re operating in our markets, you are complying with regulation.”
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