Binance to Pay $1.7M to Brazilian Regulator Over Derivatives Law Violations

Binance, through its Brazilian subsidiary B Fintech Serviços de Tecnologia Ltda, has agreed to a $1.7 million settlement with Brazil’s Comissão de Valores Mobiliários (CVM) following alleged violations of local derivatives laws. The settlement resolves a case that dates back to 2020 when the CVM first ordered Binance to cease offering derivatives in Brazil due to the lack of necessary regulatory approval.

Under Brazilian law, derivatives are classified as securities, requiring specific authorization from regulators. Binance, however, continued to offer these products through its subsidiary B Fintech without proper authorization, prompting regulatory action. Although Binance initially complied by removing the Binance Futures service from its Brazilian website, it allegedly continued to provide access through workarounds, such as allowing users to switch the website language to Portuguese.

This led the CVM to close its initial investigation but open a second case in December 2022 after discovering the workaround. Binance’s initial settlement offer of $370,000 in August 2023 was rejected by the CVM, which found the amount insufficient given the severity of the infractions. Following further negotiations, Binance proposed a revised settlement of $1.7 million in February 2024, which was accepted by the regulator as a satisfactory resolution.

Global Regulatory Challenges for Binance

Binance’s regulatory issues are not confined to Brazil. The cryptocurrency exchange has faced increasing scrutiny globally. In the United States, the Commodity Futures Trading Commission (CFTC) has accused Binance of failing to properly register its derivatives products. Similarly, in Nigeria, Binance executives have been accused of violating anti-money laundering laws, contributing to currency devaluation, and the platform has also faced regulatory hurdles in Europe, leading to its exit from markets such as the Netherlands.

In response to these challenges, Binance has been working to solidify its operations in Brazil by acquiring local entities that are compliant with national regulations. Notably, Binance recently acquired Sim;paul Investimentos, a brokerage firm licensed by both the CVM and the Central Bank of Brazil, signaling its commitment to adhering to local regulatory frameworks.

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