The United States District Court for the Northern District of Illinois has ordered crypto exchange Binance and its former CEO Changpeng ‘CZ’ Zhao to pay $2.7 billion and $150 million, respectively, to the Commodity Futures Trading Commission (CFTC) in the illegal derivatives exchange case.
The CFTC said in a statement on December 18, 2023 that the court has approved the previously announced settlement and concluded the enforcement action first issued by CFTC in November 2023. “The court finds Zhao and Binance violated the Commodity Exchange Act (CEA) and CFTC regulations, and imposes a $150 million civil monetary penalty personally against Zhao, and requires Binance to disgorge $1.35 billion of ill-gotten transaction fees and pay a $1.35 billion penalty to CFTC,” CFTC said in a statement.
The approved settlement marks the conclusion of a long-running case against Zhao and Binance by the CFTC. The CFTC had sued Zhao and Binance on March 27, 2023 for evading federal law and operating an illegal derivatives exchange, reported Cointelegraph.com.
On November 21, 2023, Zhao agreed to step down from his role at the helm of Binance as part of a wider settlement with the US Department of Justice, the Treasury Department and CFTC. On the same day, Zhao pleaded guilty to several civil charges and one criminal charge relating to Anti-Money Laundering laws. Later on December 27, 2023 the court ordered Zhao to remain in the US until his February 23, 2024 sentencing date. Zhao faces up to 18 months in prison on money laundering charges and has agreed not to appeal any potential sentence up to that length.
As part of the settlement, both Zhao and Binance have agreed to take further steps to ensure know-your-customer (KYC) measures are maintained on the exchange as well as requiring Binance to implement a formalised corporate governance structure, including a board of directors with independent members, a compliance committee and an audit committee.
The United Kingdom Financial Services and Markets Act’s provisions on a digital securities sandbox are scheduled to come into force in January 2024 after being presented to the UK Parliament.
In a publication on December 18, 2023, the UK government announced the Digital Securities Sandbox (DSS) regulations of the 2023 Financial Services and Markets Act, which were laid before the British Parliament, paving the way for crypto firms to test products and services in the country.
According to the UK government, the regulations will take effect on January 8, 2023 with the Bank of England and the UK Financial Conduct Authority operating the sandbox.
“The DSS will allow firms and the regulators to test the use of new technology across our financial markets. In particular, this will involve trialling the use of developing technology (such as distributed ledger technology, or in general technology that facilitates what are commonly referred to as ‘digital assets’) to perform the activities of a central securities depository (specifically notary, settlement and maintenance), and operating a trading venue,” the UK government said in a memo explaining the bill.
The sandbox regulations were part of the Financial Services and Markets Act, signed into law in June 2023 after being introduced in 2022. The bill included guidelines allowing crypto firms to operate in the UK under a regulatory framework to promote innovative technologies while protecting consumers.
The United States Securities and Exchange Commission (SEC) has pushed back its decision on a roster of Ethereum exchange-traded funds (ETFs), with the final date for a potential approval arriving in May 2024.
In a bunch of regulatory filings on December 18, 2023, the SEC delayed its decision on the Hashdex Ethereum ETF and the Grayscale Ethereum Futures ETF. The Hashdex Ethereum ETF aims to hold both spot ether and futures contracts, while Grayscale’s Ethereum futures ETF is seen as a “trojan horse” that would corner the SEC into allowing Grayscale to convert its Ethereum Trust to a spot Ethereum ETF.
The SEC said in the filings that it was instituting proceedings that involve gathering further public input around whether or not the ETFs should be listed.
The SEC also pushed back its decision on the VanEck spot Ethereum ETF and the spot Ethereum ETF lodged by Cathie Wood’s ARK Invest and 21Shares.