- In order to end an ongoing inquiry, Binance consented to pay the Brazilian authorities $1.76 million.
A noteworthy development is that Binance has consented to resolve an ongoing inquiry into its improper futures trading in Brazil by paying the Brazilian Securities and Exchange Commission (CVM) 9.6 million reais ($1.76 million).
With this, the more than four-year-long regulatory dispute between Brazil’s financial regulators and Binance, the largest cryptocurrency exchange in the world, comes to an end.
Even though Binance has started up again, the settlement demonstrates the exchange’s ongoing difficulties with international regulatory agencies, especially when navigating an even more complicated international legal framework and stricter local rules.
What Does the Settlement That Binance Agreed to Mean for Brazil?
After a lengthy investigation that started in June 2020 after the Brazilian regulator accused Binance of providing futures trading without the necessary authorization, Binance and the CVM reached a resolution this week.
Initially, the CVM had threatened Binance with daily fines of 1,000 reais for non-compliance and ordered Binance to immediately stop all such actions.
Binance made other attempts to reach a settlement over the following four years, including one in August 2023 for 2 million reais ($370,000), which the CVM rejected as being insufficient.
The case was not closed until February 2024 when a new 9.6 million real proposal was made and approved.
Binance has consented to stop all derivatives trading in Brazil as part of the settlement; the CVM views these transactions as securities offerings.
Despite these difficulties, Binance continues to dominate the global cryptocurrency market and adjusts its business practices to comply with various international laws.
The new analysis from Kaiko, which discovered that the amount of cryptocurrency trade in Brazil denominated in Brazilian real exceeded $6 billion in just the first four months of this year, further complicates Binance’s position.
According to this data, there are significant stakes in Brazil’s cryptocurrency market, and trade activity appears to be ongoing despite regulatory pressure.
This continued interest can mean that the exchange considers Binance’s settlement to be an inevitable expense of operating in a profitable and expanding industry.
Binance’s Tactical Action Amidst Regulatory Difficulties
The CVM ordered Binance to halt providing futures trading services last year, citing a lack of an appropriate license as the reason for the company’s regulatory issues in Brazil. This is when Binance’s problems began.
These services were seen by the CVM as securities that needed to be registered and complied with local regulations.
Due to Binance’s reluctance to follow this directive, the exchange was able to maintain operations in the nation during a protracted dispute with the regulator.
As previously stated, Binance issued its first settlement offer of 2 million reals in August of 2023.
Scholarships for Brazilian students interested in studying crypto regulation were part of the offer, however the CVM found the amount insufficient considering the severity of the infractions.
According to the regulator, Binance was engaging in actions that ought to have been closely supervised and carried out with harsher penalties.
The CVM said in a statement released on August 14 that Binance eventually made a fresh proposal in February 2024 following more discussions.
The regulatory dispute was essentially resolved when this 9.6 million reais proposal was approved following negotiations with the CVM’s Term of Commitment Committee (CTC).
Nevertheless, Binance’s regulatory issues continue; the exchange is still under investigation in a number of countries throughout the globe.
Notably, Binance resumed operations in India following comparable penalties and accusations levied by Indian authorities. After the punishment was paid, the URL was unbanned, and it began operating partially in India. This signals that Brazil may likewise allow Binance to legally continue operating.
Disclaimer : This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.
