Binance’s Battle with SEC Culminates to a $4.3B Settlement for Securities Law Violations

How things unravelled as Binance agrees to pay $4.3 billion to settle criminal charges related to breaching anti-money laundering requirements.
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Quick take:

  • Binance has agreed to pay $4.3 billion to settle its criminal case with the DOJ.
  • Binance CEO Chengpeng “CZ” Zhao also agreed to step down from his position.
  • Binance has already started delisting multiple tokens including APT and AXS as part of the requirement by the SEC.

Binance’s war with the Securities and Exchange Commission (SEC) has culminated in a $4.3 billion settlement and the resignation of Chengpeng “CZ” Zhao as CEO. The world’s largest crypto exchange has been in battle with the US securities regulator since June 2023, when the capital markets watchdog filed 13 charges against the crypto company and its associates.

The charges were first filed five months ago with Binance accusing the SEC of walking out of negotiations for a settlement. 

At the time, Binance and its associates were charged with misusing customer funds and running an illegal crypto exchange in the US, among other accusations.  On Monday, the US Department of Justice asked Binance to pay $4.3 billion to settle criminal investigations levelled against it in relation to breaching securities laws.

According to the agreement, Binance co-founder and chief executive Changpeng “CZ” Zhao may also face criminal charges, a person familiar with the matter told Bloomberg on Monday. CZ has since stepped down as CEO of the crypto company.

Writing in a post on X, on November 21, 2023, CZ said the decision to resign his position was good for the community, Binance and himself.

“Today, I stepped down as CEO of Binance. Admittedly, it was not easy to let go emotionally. But I know it is the right thing to do. I made mistakes, and I must take responsibility. This is best for our community, for Binance, and for myself.”

Since the announcement, Binance has already started complying with the agreement, delisting multiple tokens including Aptos token $APT and Axie Infinity’s utility token $AXS, among others.

Here is a quick rundown of how Binance ended up paying $4.3 billion to the DOJ and its co-founder and CEO CZ stepping down.

In March 2023, the US Commodity Futures Trading Commission (CFTC) filed a complaint against Binance and its CEO, Changpeng Zhao in a federal court in Chicago, accusing Binance of offering unregistered securities to US residents. Samuel Lim, Binance’s former Chief Compliance Officer was also accused of aiding and abetting the company’s securities law violations.

At the time, the crypto exchange company was also being scrutinised for moving $1.8 billion in assets to hedge funds between August and December 2022 without notifying customers. Those accusations raised questions on transparency and trust given that Binance had previously told customers that the tokens were 100% backed.

The war between Binance and the SEC escalated on June 5, 2023, when the US securities watchdog filed 13 charges against CZ and his company, accusing the parties of multiple securities violations.

CZ and Binance were accused of misusing customer funds through Market Makers that CZ “owned and controlled”.  According to the June filing, this activity enabled CZ to manipulate trading on the Binance US platform.

In response to the SEC charges, Binance published a statement on its website claiming that the US capital markets regulator “aims to unilaterally define crypto market structure.”

A few days later, Binance.US announced it would delist 10 trading pairs and cease over-the-counter  (OTC) trading of cryptocurrencies. 

In August, Binance.US discontinued trading for multiple tokens, which the SEC had deemed as examples of unregistered securities including trading for AXS, CHZ, MANA, MATIC, NEAR, SAND and SOL.

Binance has continued to delist multiple tokens and crypto pairs from its platform, including the BUSD and various pairs, which are set to be discontinued at 03:00 (UTC), on November 24, 2023, just days after agreeing to pay $4.3 billion in fines to the DOJ to settle the criminal case.


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