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Journalist
Hassan Shittu
Journalist
Hassan Shittu
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In a significant development, Binance has agreed to pay 9.6 million reais ($1.76 million) to the Brazilian Securities and Exchange Commission (CVM) to settle an ongoing investigation into its unauthorized derivatives trading in Brazil.
This marks the conclusion of a more than four-year-long regulatory standoff between Binance, the world’s largest cryptocurrency exchange, and Brazil’s financial authorities.
Although Binance has resumed operations, the settlement shows the exchange’s continuing challenges with global regulatory bodies, particularly as it navigates an increasingly complex international legal system and even harder local laws.
Binance Agreed to Settlement: What Does This Mean to Brazil?
Binance’s settlement with the CVM, which was finalized this week, brings an end to an investigation that began in June 2020 when the Brazilian regulator accused Binance of offering derivatives trading without proper authorization.
The CVM had initially ordered Binance to cease all such activities immediately and threatened daily fines of 1,000 reais for non-compliance.
Over the next four years, Binance made several attempts to settle, including an August 2023 offer of 2 million reais ($370,000), which the CVM rejected as insufficient.
It wasn’t until February 2024 that a new proposal of 9.6 million reais was presented and accepted, effectively closing the case.
As part of the settlement, Binance has agreed to halt all derivatives trading in Brazil, which the CVM classifies as securities offerings.
Despite these challenges, Binance remains a dominant player in the global crypto market, though it continues to adapt its operations to align with varying international regulations.
Adding to the complexity of Binance’s situation is the recent research from Kaiko, which found that cryptocurrency trading volume in Brazil, denominated in Brazilian real, exceeded $6 billion in just the first four months of this year.
This data revealed the high stakes involved in Brazil’s crypto market and suggests that, despite regulatory pressure, substantial trading activity is still occurring.
This ongoing interest could indicate that the exchange may view Binance’s settlement as a necessary cost of business in a lucrative and growing market.
Binance’s Strategic Move Amid Regulatory Hardships
The roots of Binance’s regulatory troubles in Brazil can be traced back to last year, when the CVM issued an order for Binance to stop offering derivatives trading services, citing the lack of a proper license.
The CVM viewed these services as securities requiring registration and adherence to local laws.
Binance’s refusal to comply with this order led to a prolonged standoff with the regulator, during which time the exchange continued to operate in the country.
In August 2023, Binance made its first settlement offer of 2 million reais, as mentioned earlier.
The offer included provisions for funding scholarships for Brazilian students interested in studying crypto regulation, but the CVM deemed the sum inadequate given the scale of the violations.
The regulator maintained that Binance was performing activities that should have been subject to strict oversight, resulting in a harder consequence.
According to a statement published on August 14 by the CVM, after continued negotiations, Binance finally presented a new proposal in February 2024.
This proposal, worth 9.6 million reais, was accepted after discussions with the CVM’s Term of Commitment Committee (CTC), effectively ending the regulatory battle.
However, this settlement does not end Binance’s regulatory challenges; the exchange remains scrutinized in multiple jurisdictions worldwide.
Notably, Binance started operations back in India after facing similar fines and charges from the Indian regulators. The URL’s unbanning and partial operation in India after the fine was paid suggests that Brazil might also grant Binance access to continue operations legally.
