WASHINGTON D.C. – Former Binance Chief Compliance Officer Samuel Lim faces a $1.5 million penalty and a lifetime ban from certain financial activities following a settlement with the Commodity Futures Trading Commission (CFTC). The proposed consent order, submitted to U.S. District Judge Manish Shah in the Northern District of Illinois on November 21, 2023, resolves charges that Lim willfully aided and abetted Binance’s violations of the Commodity Exchange Act (CEA).
The CFTC alleges that Lim undermined Binance’s internal controls to retain U.S.-based customers, despite knowing this subjected both himself and the company to U.S. regulation. He is accused of directly violating CFTC Regulation 1.6 and aiding and abetting Binance’s illegal offering of commodity derivatives to U.S. customers without proper identity verification. The complaint further states Lim facilitated Binance’s supervisory failures, including the use of applications designed to automatically delete evidence of illicit communications.
“We take seriously the role corporate gatekeepers play in maintaining integrity in the markets we regulate, including digital asset markets,” stated Ian McGinley, CFTC’s Director of Enforcement. “Chief compliance officers should take note of today’s proposed order: If your compliance program is merely ‘for show’ and is intentionally ineffective, the CFTC will hold you accountable for facilitating illegal conduct.”
According to Gretchen Lowe, CFTC’s Enforcement Division Principal Deputy Director and Chief Counsel, the investigation revealed that Binance’s claims of robust internal controls and lack of U.S. customers were a facade. Instead, the company’s CEO and CCO allegedly promoted “workarounds” and “creative means” to evade U.S. derivatives laws. The proposed order stems from a complaint filed against numerous Binance-affiliated defendants, including Lim, on March 27, 2023.
The proposed settlement permanently prohibits Lim from acting as an unregistered futures commission merchant, operating an illegal digital asset derivatives exchange, and failing to maintain adequate “know-your-customer” compliance controls. The agreement is subject to court approval. The CFTC is seeking a permanent injunction and equitable relief in addition to the monetary penalty.
Source: CFTC.gov
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