Binance Agrees to $1.76M Settlement with Brazilian Authorities
Binance, the largest crypto exchange, has finally reached a settlement with Brazilian regulators for $1.76 million over unlicenced derivatives trading allegations.
This comes after an investigation into the exchange, which lasted a year regarding its activities in Brazil.
Binance’s Derivatives Trading Allegations
The Brazilian Securities and Exchange Commission (CVM) asked Binance to halt its derivatives trading services in the country, citing that the exchange was not authorized to operate as a securities intermediary in July 2020. The CVM threatened Binance with a daily fine of 1,000 real if it failed to comply.
In August 2023, Binance proposed a 2 million real ($370,000) settlement to resolve the issue, but the CVM rejected it as insufficient. On February 15, 2024, Binance submitted a revised proposal and, following negotiations with the Term of Commitment Committee (CTC), agreed to pay 9.6 million ($1.76 million) real to the CVM.
In a statement released on Wednesday, the CVM confirmed the news, noting that Binance had engaged in the distribution and mediation of securities operations for Brazilian residents without being a member of the securities distribution system or obtaining the necessary registration or exemption from registration with the agency.
This isn’t the first time Binance has faced fines related to regulation issues. Just last month, India’s Financial Intelligence Unit (FIU) fined the exchange $2.25 million for not following the anti-money laundering regulations. Back in May, Canada also fined the company $4.4 million for failing to report transactions over $10,000 CAD and not registering as an FMSB.
Crypto Adoption in Brazil Surges
Economic turbulence in Brazil, marked by high inflation and a declining currency, has led to a notable increase in cryptocurrency adoption. As the local currency weakens, many Brazilians are turning to digital assets to safeguard their finances.
By 2021, around 8% of Brazilians had ventured into crypto investments, making the country the 14th highest in global adoption rates. Brazil has also advanced significantly in financial inclusion compared to its Latin American peers. The World Bank Global Findex recently reported 70% card usage and a rise in real-time payment systems.
The Brazilian government has supported this trend by introducing the Pix payment system in 2020, a digital platform that has made it easier for people to engage in crypto transactions.
Despite facing regulatory issues, domestic crypto exchanges have continued to grow. With increasing digital literacy and a better understanding of digital finance, more Brazilians see crypto assets as a viable investment alternative.
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