Washington, D.C. — The Commodity Futures Buying and selling Fee at the moment introduced former Binance Chief Compliance Officer, Samuel Lim, agreed to a proposed consent order for everlasting injunction, civil financial penalty, and equitable aid that, if entered by the U.S. District Court docket for the Northern District of Illinois, will resolve all expenses the CFTC introduced in opposition to Lim for violating the Commodity Change Act (CEA) and willfully aiding and abetting Binance’s quite a few violations of the CEA as detailed within the CFTC submitting in opposition to Binance at the moment. [See CFTC Press Release No. XXX]
The proposed consent order requires Lim to pay a $1.5 million civil financial penalty.
As well as, it completely prohibits Lim from willfully evading the CEA. The Consent Order additionally completely prohibits Lim from, straight or not directly, appearing as an unregistered futures fee service provider (FCM); working an unlawful digital asset derivatives change; and failing to have satisfactory know-your-customer compliance controls amongst different unlawful actions described within the proposed order.
The proposed settlement and cures are topic to court docket approval. The CFTC submitted the proposed consent order to U.S. District Choose Manish Shah at the moment for evaluation.
“We take severely the position company gatekeepers play in sustaining integrity within the markets we regulate, together with digital asset markets,” mentioned CFTC’s Director of Enforcement Ian McGinley. “Chief compliance officers ought to be aware of at the moment’s proposed order: In case your compliance program is merely ‘for present’ and is deliberately ineffective, the CFTC will maintain you accountable for facilitating unlawful conduct.”
“The CFTC’s motion and proposed resolutions replicate the laborious work and dedication of the Division of Enforcement employees who seemed past the corporate’s touting of its inner controls and claims of getting no clients in the US to disclose that it was all window dressing, and as a substitute of getting a sturdy compliance system, its CEO and CCO promoted ‘workarounds’ and ‘inventive means’ to willfully evade the U.S. derivatives legal guidelines,” mentioned Gretchen Lowe, CFTC’s Enforcement Division Principal Deputy Director and Chief Counsel.
The proposed order stems from the CFTC criticism filed March 27, in opposition to quite a few Binance-affiliated defendants together with Lim. [See CFTC Press Release No. 8680-23] The proposed order states Lim straight violated CFTC Regulation 1.6, based mostly partially on Lim’s position in undermining Binance’s inner management atmosphere in reference to the corporate’s strategic effort to retain profitable U.S.-based clients, regardless of Lim’s consciousness such conduct subjected he and Binance to U.S. regulation.
The proposed order additional finds Lim aided and abetted Binance’s quite a few violations of the CEA, together with its unlawful providing and execution of commodity derivatives transactions to and for U.S. clients, and accepting funds from these clients, who for a lot of the related interval weren’t required to supply any identity-verifying info earlier than buying and selling on the platform. It additionally offers Lim aided and abetted Binance’s many supervisory failures, which violated CFTC Regulation 166.3, together with Binance’s company observe of speaking about unlawful conduct utilizing purposes that will be set to mechanically destroy proof of such communications.
Clients and different people can report suspicious actions or info, corresponding to attainable violations of commodity buying and selling legal guidelines, to the Division of Enforcement through a toll-free hotline 866-FON-CFTC (866-366-2382) or file a tip or complaint on-line or contact the Whistleblower Office. Whistleblowers could also be eligible to obtain between 10 and 30 % of the financial sanctions collected, paid from the CFTC Buyer Safety Fund financed by financial sanctions paid to the CFTC by violators of the CEA.