Binance Reaches $1.7 Million Settlement with Brazilian Securities Regulator Over Unauthorized Derivatives Offering
Binance, the world’s largest cryptocurrency exchange, has agreed to pay 9.6 million Brazilian reais (approximately $1.7 million) to Brazil’s Securities and Exchange Commission (CVM) to settle an investigation into unauthorized derivatives offerings. The settlement, announced on August 14, 2024, marks the end of a years-long dispute between the crypto giant and Brazilian regulators.
The CVM first issued a warning to Binance in 2020, ordering the exchange to cease offering derivatives trading services to Brazilian residents without proper authorization. The regulator argued that crypto derivatives constitute securities offerings within the country, requiring specific licenses that Binance did not possess at the time.
Over the past four years, Binance and the CVM engaged in negotiations to resolve the issue. The exchange initially proposed smaller settlement amounts, including an offer of 2 million reais (about $370,000) in August 2023, which the CVM rejected. The final agreement of 9.6 million reais represents a significant increase from earlier proposals.
A Binance spokesperson stated, “Since the regulator’s first communication to Binance in 2020, the exchange has taken all steps and necessary actions to respond to the authority and comply with local requirements.” The company added that the CVM’s acceptance of the settlement “reaffirms that the adjustments and upgrades made by Binance throughout time are sufficient for the regulatory agency.”
As part of the settlement, Binance is now prohibited from offering derivatives products in Brazil. However, the exchange continues to operate in the country, focusing on spot trading and other permitted services.
This agreement comes amid broader global regulatory challenges for Binance. The exchange has faced scrutiny in various jurisdictions, including the United States, where the Commodity Futures Trading Commission has raised similar concerns about unregistered derivatives offerings.
The Brazilian crypto market has shown significant growth, with a recent report from Kaiko Research indicating that crypto trading volume denominated in Brazilian currency surpassed $6 billion in the first four months of 2024 alone. This settlement allows Binance to put its regulatory issues in Brazil to rest and potentially focus on capturing a share of this expanding market within the bounds of local regulations.
