Today, the CFTC has filed with the court a proposed resolution of the case against Binance, which operates the world’s largest digital asset trading platform, its founder and CEO Changpeng Zhao, and its Chief Compliance Officer Samuel Lim, in connection with proposed resolutions of a criminal case by the Department of Justice, and a civil case by the Department of Treasury’s Financial Crimes Enforcement Network (“FinCEN”) and Treasury’s Office of Foreign Assets Control (“OFAC”).  The case is resolved for $2.8 billion, a ban from operating unregistered in CFTC-regulated markets, changes to implement Know Your Customer (KYC) controls, and removing accounts that violate the new controls, including U.S. trading firms.

The CFTC has zero tolerance for crypto platforms used for illicit finance.[1]  Binance was aware that its platform facilitated illicit activity by terrorist organizations like Hamas, darknet marketplaces like Hydra, and others.  Instead of shutting down this criminal activity financing, Binance turned a blind eye and even advised users how to circumvent Binance’s superficial controls.  Today, the CFTC, in partnership with the Department of Justice, FinCEN and OFAC, has helped to shut down a pathway for illicit finance.

There are no pirate ships in U.S. markets.  Access to U.S. customers is a privilege, not a right.  The CFTC will aggressively go after crypto platforms operating in U.S. markets that seek to evade the CFTC’s customer protection regime.  Binance is the first defendant charged under the CFTC’s anti-evasion law implemented by the Dodd Frank Act.  Its maze of corporate entities designed to obscure the ownership, control and location of the Binance platform did not work.  This case should also send a message that the CFTC will not tolerate use of VPNs, “I am not a U.S. customer”-type pop-up buttons, or any other actions to circumvent KYC obligations.

I am tremendously proud of our enforcement staff for their doggedness in bringing justice and accountability.  I am also very grateful to all of our law enforcement partners.