How much was Binance fined by the United States?

Written by: 0xjs@金财经

Despite the episode of Changpeng Zhao being detained by the United States, many people thought that the Binance settlement case was a new chapter in the overwhelming information about the huge "US$4.3 billion" fine, until December 18th.

The U.S. CFTC announced on its official website that day that the U.S. District Court for the Northern District of Illinois had approved the settlement agreement between the CFTC and Binance and Changpeng Zhao announced on November 21, 2023. After Binance and Changpeng Zhao submitted a request to the CFTC CFTC ends enforcement action after paying $2.85 billion.

A careful study found that the US$2.85 billion in the CFTC settlement agreement on November 21 was actually submerged in Binance’s huge US$4.3 billion fine that day. Reconciliation information included.

Amidst all the noise, no one seems to be seriously exploring how much money Binance was fined by the US government?

Let’s go back and read in depth the text of the settlement agreement between the U.S. CFTC, the U.S. Department of the Treasury (FinCEN, OFAC), and the U.S. Department of Justice.

CFTC Breakdown of US$2.85 billion settlement amount

CFTC’s US$2.85 billion settlement amount includes: 

1. US$1.35 billion: Binance “disgorges” ill-gotten transaction fees 

2.150 million US dollars: civil penalty against Zhao Changpeng

3. US$1.35 billion: Civil fine

According to the CFTC’s settlement document, the CFTC will receive US$2.85 billion. The CFTC has not said at all how the US$2.85 billion will belong ( credit).

U.S. Treasury Department Breakdown of $4.368 billion fine

According to information released by the U.S. Treasury Department, the U.S. Treasury Department mainly FinCEN  and OFAC  participated in the settlement case of Binance.

Among them, FinCEN 3.4 Civil Penalty) and OFAC  were fined $968 USD.

FinCEN 3.4 USD civil penalty attribution

In the attribution of FinCEN 3.4 $3.4 civil penalty, U.S. Department of Justice DOJ  and the CFTC received US$2.47 billion; the U.S. Treasury Department DOT received US$780 million, and FinCEN also has a suspension fine of US$150 million. If Binance fails to comply with the required compliance commitments and regulatory provisions, FinCEN  ;This penalty will be charged.

 Source: FinCEN Binance Enforcement Action P59

OFAC  USD 968 million vested

Of the $968 million OFAC fine, OFAC can get $898 million, and the U.S. Treasury Department DOT can get $70 million.

ComeSource: OFAC Binance Settlement Document P5

Note that the image above states that $898 million should be considered Binance’s obligations under its plea agreement with the U.S. Department of Justice. This amount is the same as Binance’s plea agreement with the Department of Justice.

Breakdown:

43.68=34 (FinCEN civil penalty) + 9.68 (OFAC settlement amount)

34 =9.3 ( FinCEN 1.5 Suspension + Treasury Department 7.8) + 24.7 (Department of Justice and CFTC)

9.68=8.98 (OFAC) + 0.7 (Treasury Department)

Because $150 million is a moratorium on fines, The money will only be triggered if Binance fails to comply with required compliance commitments and regulatory terms.

So, according to the settlement document between the Ministry of Finance and Binance,the total settlement amount is 4.368-1.5=4.218 billion Dollar. Among them, the U.S. Department of the Treasury (including all FinCEN and OFAC agencies) will receive $1.748 billion, and the Department of Justice and the CFTC will share the remaining $2.47 billion.

U.S. Department of Justice DOJ $4.36 billion breakdown

According to news released by the U.S. Department of Justice, Binance agreed to confiscate  2,510,650,588 USD and pay a criminal fine (Criminal Fine) of US$1,805,475,575 for a total fine of US$ 4,316,126,163  Coupled with the US$50 million fine imposed on Zhao Changpeng, the total is US$4.36 billion.

How the $1.805 billion criminal fine is attributed

Source: Binance U.S. Department of Justice Plea Agreement P13

Of the $1.805 billion in criminal fines, the CFTC received $950 million (CFTC Credit), the U.S. Treasury Department (FinCEN or OFAC) received US$850 million.

1.8 billion (criminal fine) = 950 million (CFTC) + 850 million (FinCEN/OFAC)

How to attribute the US$2.51 billion in confiscated funds

Source: Binance U.S. Department of Justice Plea Agreement P15

Of which US$1.612 billion comes from transaction fees of US users; US$898.6 million comes from transactions in sanctioned countries such as Iran, which is the "US Treasury Department OFAC  968 million fine The $898 million OFAC received in the “Attribution” section.

2.51 billion (confiscation) = 1.612 billion (unjust enrichment transaction fee) + 898 million (OFAC)

Broken down:

43.6=18 (criminal fine )+25.1 (confiscation) +0.5 (Zhao Changpeng’s personal fine)

18=9.5 (CFTC) +8.5 (FinCEN/OFAC)

25.1 (confiscation)=16.12 (improper transaction fee (Deli) +8.98 (OFAC)

According to the settlement documents of the U.S. Department of Justice, the total settlement amount is US$4.36 billion. Among them, US$1.7486 billion will be allocated to the US Department of the Treasury (including all agencies of FinCEN and OFAC), and US$950 million will be clearly allocated to the CTFC. There is still US$1.612 billion that has not been clearly attributed.

Conclusion

< p>Comparing the settlement documents of the three departments of Binance law enforcement, we can find:

1.  The three departments’ The settlement amount itself is not commensurate: the U.S. Treasury Department’s settlement amount is $4.218 billion, the U.S. Department of Justice’s settlement amount is $4.36 billion, and the CFTC’s settlement amount is $2.85 billion;

2. According to documents from the Treasury Department and the Ministry of Justice, The U.S. Treasury Department will share the same amount, approximately US$1.748 billion;

3. According to the documents of the Ministry of Justice, after excluding the US$1.748 billion allocated to the US Treasury Department and the US$950 million clearly allocated to the CFTC, there is still US$1.612 billion remaining, but it is not clear to whom;

4. According to the CFTC documents, Binance will pay the CFTC $2.85 billion, which exceeds the maximum amount that can be allocated to the CFTC in the documents of the Ministry of Finance and the Ministry of Justice;

5. It is completely absent from the CFTC documents. Talking about the ownership of US$2.85 billion, the court has now approved the CFTC settlement agreement; and according to the documents of the Ministry of Finance, the Department of Justice and the CFTC divided a total of US$2.47 billion;

6. Due to the settlement documents of the three government departments There is a conflict in itself, It is temporarily impossible to determine the specific amount of Binance's settlement amount; but it is obvious that Binance has "people are fighting for their own good", The US government has broken its promise and Zhao Changpeng has been detained.

7. Binance has signed and agreed to the settlement documents of these three companies. They may all strive for the best interests for themselves, so it is understandable that the CFTC will get the court to approve its own settlement agreement first;

< p>8. The amount that has been determined is US$4.598 billion (US Treasury’s 17.48 + CFTC’s 28.5), which has exceeded the November "news" The reported $4.3 billion does not include the amount divided by the U.S. Department of Justice.

9. All settlement documents have punitive clauses that "increase the punishment if the offense occurs again." The United States’ “fishing law enforcement” is also well-known.

So, Binance now seems to be a hen that lays golden eggs to the US government.

"Plucking the feathers while preventing the geese from croaking" and "harvesting once you have accumulated enough" may be the best strategies of the US government.