Release Number 8826-23
Binance Former Chief Compliance Officer, Samuel Lim, Agrees to Pay $1.5 Million for Willfully Evading U.S. Law, and Aiding and Abetting the Illegal Operation of a Digital Asset Derivatives Exchange, and Other Violations
November 21, 2023
Washington, D.C. — The Commodity Futures Trading Commission today announced former Binance Chief Compliance Officer, Samuel Lim, agreed to a proposed consent order for permanent injunction, civil monetary penalty, and equitable relief that, if entered by the U.S. District Court for the Northern District of Illinois, will resolve all charges the CFTC brought against Lim for violating the Commodity Exchange Act (CEA) and willfully aiding and abetting Binance’s numerous violations of the CEA as detailed in the CFTC filing against Binance today. [See CFTC Press Release No. 8825-23]
The proposed consent order requires Lim to pay a $1.5 million civil monetary penalty.
In addition, it permanently prohibits Lim from willfully evading the CEA. The Consent Order also permanently prohibits Lim from, directly or indirectly, acting as an unregistered futures commission merchant (FCM); operating an illegal digital asset derivatives exchange; and failing to have adequate know-your-customer compliance controls among other illegal activities described in the proposed order.
The proposed settlement and remedies are subject to court approval. The CFTC submitted the proposed consent order to U.S. District Judge Manish Shah today for review.
“We take seriously the role corporate gatekeepers play in maintaining integrity in the markets we regulate, including digital asset markets,” said CFTC’s Director of Enforcement Ian McGinley. “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.”
“The CFTC’s action and proposed resolutions reflect the hard work and dedication of the Division of Enforcement staff who looked beyond the company’s touting of its internal controls and claims of having no customers in the United States to reveal that it was all window dressing, and instead of having a robust compliance system, its CEO and CCO promoted ‘workarounds’ and ‘creative means’ to willfully evade the U.S. derivatives laws,” said Gretchen Lowe, CFTC’s Enforcement Division Principal Deputy Director and Chief Counsel.
The proposed order stems from the CFTC complaint filed March 27, against numerous Binance-affiliated defendants including Lim. [See CFTC Press Release No. 8680-23] The proposed order states Lim directly violated CFTC Regulation 1.6, based in part on Lim’s role in undermining Binance’s internal control environment in connection with the company’s strategic effort to retain lucrative U.S.-based customers, despite Lim’s awareness such conduct subjected he and Binance to U.S. regulation.
The proposed order further finds Lim aided and abetted Binance’s numerous violations of the CEA, including its illegal offering and execution of commodity derivatives transactions to and for U.S. customers, and accepting funds from those customers, who for most of the relevant period were not required to provide any identity-verifying information before trading on the platform. It also provides Lim aided and abetted Binance’s many supervisory failures, which violated CFTC Regulation 166.3, including Binance’s corporate practice of communicating about illegal conduct using applications that would be set to automatically destroy evidence of such communications.
Customers and other individuals can report suspicious activities or information, such as possible violations of commodity trading laws, to the Division of Enforcement via a toll-free hotline 866-FON-CFTC (866-366-2382) or file a tip or complaint online or contact the Whistleblower Office. Whistleblowers may be eligible to receive between 10 and 30 percent of the monetary sanctions collected, paid from the CFTC Customer Protection Fund financed through monetary sanctions paid to the CFTC by violators of the CEA.