Binance, via its Brazilian subsidiary B Fintech Serviços de Tecnologia Ltda, has agreed to pay $1.7 million to authorities. This settlement resolves a case with the Brazilian regulator Comissão de Valores Mobiliários (CVM) over alleged violations of local derivatives laws. The CVM’s scrutiny of Binance in Brazil dates back to 2020, when the exchange was first ordered to halt the offering of derivatives in the country.

Under Brazilian law, derivative contracts are classified as securities, requiring specific regulatory approval. However, Binance, operating through B Fintech, did not hold this authorization, prompting the CVM to intervene. Initially, Binance complied by removing the Binance Futures service from its Brazilian website, but it reportedly continued offering the product through workarounds, such as allowing access to clients who changed the website language to Portuguese.

Following Binance’s partial compliance, the CVM closed the first case. However, the regulatory agency launched a second administrative process into Binance in December 2022 due to these workarounds. As part of the settlement terms for the second case, Binance proposed a $370,000 fine in August 2023, which the CVM rejected. The agency deemed this proposal insufficient due to the seriousness of the allegations and found that it did not adequately address the legal violations.

After further negotiations, Binance submitted a revised proposal in February this year, which included a payment of $1.7 million. The CVM, after reviewing this new proposal, found it satisfactory and legally sound, leading to the acceptance of the settlement.

Binance’s Global Regulatory Issues

Globally, Binance has faced increasing regulatory pressures. In the United States, the Commodity Futures Trading Commission accused Binance of not properly registering its derivatives products, echoing the issues it faced in Brazil.

Nigerian authorities have also held Binance executives, accusing the exchange of violating anti-money laundering provisions and contributing to currency devaluations. Additionally, Binance has come under scrutiny from European regulators, leading to the exchange’s exit from some markets such as the Netherlands.

In Brazil, Binance has been trying to solidify its operations by acquiring local entities that are fully compliant with Brazilian regulations. This includes the acquisition of Sim;paul Investimentos, a brokerage firm licensed by the CVM and the Central Bank of Brazil.

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