Binance: New Account, Same U.S. Trading Business

The Binance CFTC lawsuit settlement required the company’s three entities to pay $1.35 billion in gains from the alleged violations and a $1.35 billion civil penalty over U.S. derivatives access and compliance evasion. The Commodity Futures Trading Commission alleged that Binance helped valuable American customers keep trading through foreign account names, VPNs and broker subaccounts. For someone who worked on those accounts, the revealing question is what changed when the customer supposedly left: the trading business, or just the name on the screen?

The Commission brought the action in federal court in Illinois. The December 14, 2023 consent order resolved its complaint filed that March. Among CFTC enforcement outcomes, this case stands out for how closely the required account reviews followed the ways customers had gained access.

What Binance Sold and Why U.S. Customers Mattered

The Commission alleged that Binance offered digital-asset derivatives, including quarterly futures, perpetual contracts and options, alongside leveraged retail trading. The consent order describes quarterly futures with fixed expiration dates and perpetuals with no expiration date, which it treats as swaps. It alleged that Binance accepted orders and assets supporting customers’ margin positions.

The order names three Binance entities as defendants. It describes a common enterprise sharing technical infrastructure and promoting the same brand. The entities held the brand, service providers and matching-engine technology behind the accounts customers saw.

According to the order, Binance earned transaction fees and routinely monitored trading volume and fee revenue and knew that U.S. derivatives customers generated a meaningful part of its revenue. The Commission alleged active solicitation of American customers, including institutional VIPs, even as Binance announced restrictions on U.S. access.

In the statement of facts accompanying its criminal guilty plea, Binance admitted the commercial reason for keeping those customers. Senior leaders discussed how VIPs accounted for more than 70% of trading revenue, with U.S. VIPs accounting for about one-third of that revenue. The company also admitted that retained U.S. VIPs supplied liquidity needed for trading on the platform.

According to the Justice Department’s account of the plea, U.S. users generated over $1.6 billion in profit for Binance between August 2017 and October 2022. The customers the controls were supposed to exclude helped keep the exchange running. That is the incentive behind the account changes.

How VIP Access Survived the U.S. Restriction

In the Binance CFTC action, the Commission alleged that VIP derivatives customers kept trading through renamed accounts and broker subaccounts. Its account of the restrictions starts with controls that left the customer’s ability to trade largely intact.

The Commission alleged that after Binance began restricting access in 2019, customers could still sign up, deposit assets and trade without identity checks if they withdrew less than the value of two bitcoin in a day. According to the consent order, the September restriction based on IP addresses presented U.S. users with a pop-up asking them to certify they were not U.S. persons. It did not block login, deposits or trading.

The Commission also alleged that Binance published a guide describing how VPNs could conceal a user’s location and open access to restricted sites. The complaint alleged something more direct for a U.S. trading firm: a Binance account manager instructed it to change its customer-identification documents, the firm opened an account in a Cayman Islands subsidiary’s name, and Binance instructed it to use a VPN during account opening. Its trading activity and VIP benefits moved to the new account.

The Commission alleged that the firm made no material change to how it traded beyond the account name. The people doing the work remained employed by the U.S. firm or its subsidiaries, and the U.S. firm controlled the Cayman subsidiary.

Another account was even simpler. In its complaint’s account of a Jersey nominee, the Commission alleged that Binance replaced the name on a trading firm’s personal account with the nominee’s name:

We find that account number more revealing than the new company name. The alleged change preserved the customer’s positions, privileges and access while changing how the customer appeared in the paperwork.

The consent order describes a formal VIP Handling policy that transferred referral bonuses, VIP level and withdrawal limits. It also describes the gap after Binance announced broader verification requirements: by February 2022, only approximately 30% to 40% of customers had their identities verified through customer-identification documents.

Prime-Broker Subaccounts Reached the Same Trading Engine

The Commission alleged that prime-broker subaccounts gave U.S. customers another route to Binance derivatives. The consent order describes at least two prime brokers opening subaccounts outside Binance’s identity checks, through which U.S. customers traded directly on the platform.

The complaint explains the arrangement. A prime broker held a main account and opened one or more subaccounts for each customer. The Commission alleged that Binance neither collected identity-verifying documents for those customers nor otherwise tried to learn who they were.

That account structure matters because the broker’s identity answers only part of the question. An insider may know both the named account holder and the customer whose orders actually reached the exchange. Linking those records makes the underlying trading relationship visible.

The consent order followed the trading desks as well as the accounts. It describes a Chicago-based firm whose Illinois subsidiary owned the trading algorithms. The U.S. firm financed the trading and included its net revenue in its financial statements, while using its own account, a nominee account and a prime-broker subaccount.

The order describes the same revenue connection at a New York firm trading through a personal account and a Jersey nominee. A foreign account name tells only part of the story when the code, financing and revenue remain tied to an American trading business.

What the CFTC Settlement Addressed

The civil order addressed unregistered derivatives trading, inadequate supervision, deficient customer-identification and anti-money-laundering controls, and deliberate evasion. The registration findings followed Binance’s actual functions: accepting orders and margin assets, operating a market for swaps, and providing direct access to its trading system.

The supervision findings went further than missing identity documents. The order describes purposeful instructions to evade controls and intentional destruction of documents. The complaint alleged that senior personnel continued using Signal with automatic message deletion after the Commission’s document requests and purported preservation notices. Those missing messages and supervisory decisions belong to the same account story: who authorized the exception, who knew the customer remained American, and what survived of the discussion.

The order’s monetary obligations cover gains from the alleged violations and a separate civil penalty. Qualifying payments in related federal resolutions count toward those obligations, including a $500 million credit that reduces the remaining civil penalty owed.

The pattern has a parallel in BitMEX’s entity settlement, which addressed allegations of unregistered derivatives activity and missing customer-identification and anti-money-laundering controls. In both actions, the business accepting orders and the systems identifying customers were central to the enforcement action.

The Chief Executive’s Separate Civil Obligation

The former chief executive faced a separate $150 million CFTC civil penalty. The consent order tied his responsibility to control of Binance’s business, including major strategic decisions, the matching engines, API functions and order-entry system. It held him responsible as a person controlling the company’s violations.

In the separate criminal proceeding, the Justice Department’s account of his guilty plea says he admitted knowing that serving U.S. users required an effective anti-money-laundering program. He also knew those users were important to revenue and growth, and that identity checks would lead some customers to leave. That admission explains the business decision behind the controls.

The former chief compliance officer had his own CFTC consent order, requiring a $1.5 million civil penalty for helping Binance’s violations and evading the rules. That order describes his directions to help U.S. VIPs create new accounts with new identity documents and to use automatically deleting communications.

The Account Reviews Followed the Workarounds

The settlement required Binance to apply its onboarding controls all the way through to the customer trading. Its certifications covered the website, mobile application, API connections to the matching engines and other direct market access. Every customer opening an account or subaccount had to complete the applicable identity checks.

The review covered existing corporate and retail subaccounts, including accounts associated with prime brokers. When a permitted user acted for someone other than the named account holder, the checks had to reach that beneficiary too. Accounts that failed the controls had to be closed or restricted pending closure, with failed retail subaccounts removed.

The order tested the valuable customers directly. Binance’s chief executive and chief compliance officer had to certify a review of its top 35 revenue-generating customers, identifying every associated account, its registrant and the ownership chain behind it. The order also required an independent board presence and compliance and audit committees.

The practical point is in the reach of those checks. The review had to follow the customer through the broker, the subaccount and the ownership chain, including the accounts bringing in the most revenue.

What Binance Admitted in Its Criminal Plea

Binance’s criminal guilty plea supplied admissions about retaining U.S. customers, missing money-laundering controls and sanctions violations. The Justice Department prosecuted that proceeding, which IRS Criminal Investigation investigated. The Commission brought the civil action described above.

In its plea’s statement of facts, Binance admitted that employees contacted U.S. VIPs privately, helped register offshore-entity accounts and transferred VIP benefits. The internal policy told representatives to describe the changes as correcting inaccurate records. Its language is worth reading:

Correcting the records was the explanation. Keeping the U.S. trading business was the admitted purpose.

The company also admitted how its matching engine connected the customer populations it retained. It paired trades by price and time without automated controls or human intervention to prevent U.S. users from trading with users in sanctioned jurisdictions. Binance knew both groups were on the platform and understood what the matching engine would do.

That is why account identity mattered beyond the registration question. In the admitted sanctions conduct, the exchange’s own matching system brought the customers together. The missing checks affected the trades themselves.

What Evidence Is Required to Prove Fraud?

For the conduct in this action, the strongest evidence connects the named account to the real trader and the people who kept access open. That is the connection we build with you.

The Binance complaint shows why an account name alone can miss the point: open positions and trading privileges allegedly survived the name change. In its criminal plea, the company admitted that its internal policy helped retain U.S. VIPs. The customer records and the instructions tell the story together.

A platform engineer, account manager, compliance employee or trading-firm employee may see a different part of that relationship. Knowledge from outside the exchange can matter too: the Commission’s own program report describes participation by market participants, witnesses and compliance professionals. We work with the person who understands those records to connect the trading business to the decisions that kept it running.

CFTC Whistleblower Awards and the Settlement

Under the Commodity Exchange Act, the CFTC whistleblower program can pay whistleblowers a combined 10% to 30% of the sanctions collected. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. These are separate programs, and Binance’s action falls under the Commission’s.

Our experts bring in CFTC whistleblower lawyers who understand derivatives trading and stay with you through the case. Where your information crosses agency lines, we work with that team to assess the available reward programs.

You Know Who Was Still Trading

If you know why a restricted customer kept trading after an account change, speak to one of our Whistleblower Experts about who kept that access open. We build your strongest CFTC whistleblower case around the accounts, access and decisions, bring in CFTC whistleblower lawyers who understand digital-asset derivatives, and remain your partners throughout the case.