Binance Settles Multiple Enforcement Actions

The DOJ, OFAC, FinCEN and the CFTC settled enforcement actions against Binance, its CEO and former CCO. The coordinated settlements addressed charges against the digital asset exchange for CFTC registration failures and for violations of the Bank Secrecy Act ("BSA") and International Emergency Economic Powers Act ("IEEPA") sanctions programs.

In two press releases (see here and here), the CFTC announced that the exchange and the CEO agreed to a proposed Consent Order, issued by the U.S. District Court for the Northern District of Illinois, as to charges "for knowingly disregarding provisions of the Commodity Exchange Act (CEA) to profit from their operation of an illegal digital assets derivative exchange." (See also, previous coverage). Once approved by the Court, the Order would permanently enjoin the exchange from, among other things, acting as an unregistered futures commission merchant, operating an illegal digital asset derivatives exchange and failing to have adequate know-your-customer compliance controls. Further, the Order requires the exchange to disgorge $1.35 billion of ill-gotten gains and to pay a $1.35 billion civil monetary penalty as well as other remedial steps and equitable relief. The CFTC also announced that the former Binance Chief Compliance Officer agreed to pay a $1.5 million civil monetary penalty, and to a permanent injunction from directly or indirectly acting as an unregistered futures commission merchant or operating an illegal digital asset derivatives exchange.

In a press release, FinCEN and OFAC announced a settlement agreement for violations of the BSA and apparent violations of multiple sanctions programs. The violations include failure to implement programs to prevent and report suspicious transactions and for "matching trades between U.S. users and those in sanctioned jurisdictions." FinCEN's settlement agreement includes a civil monetary penalty of $3.4 billion, a five-year monitorship and additional compliance undertakings, including to ensure Binance's complete exit from the United States. OFAC's settlement agreement includes a $968 million penalty and additional compliance undertakings.

In a press release, the DOJ announced that Binance entered into a plea agreement to resolve an investigation into numerous violations related to the BSA, failure to register as a money transmitting business and violations of U.S. sanctions programs under the IEEPA. Binance's founder and CEO pleaded guilty to failing to maintain an effective AML program, in violation of the BSA, and resigned as CEO of Binance. As part of the plea agreement, the exchange agreed to forfeit $2,510,650,588 and to pay a criminal fine of $1,805,475,575 for a total financial penalty of $4,316,126,163. In addition, Binance agreed to retain an independent compliance monitor for three years and remediate and enhance their AML and sanctions compliance programs. The DOJ stated that it will credit approximately $1.8 billion toward Binance in connection with the settlement agreement amounts imposed following the CFTC, FinCEN and OFAC enforcement actions.