Binance ends Brazil dispute with $1.76 million settlement over derivatives

Binance has resolved its legal dispute with Brazilian regulators by agreeing to pay a settlement of $1.76 million over allegations related to unlicensed derivatives trading in the country.

The settlement concludes a year-long investigation by the Comissão de Valores Mobiliários (CVM), Brazil’s securities regulator, into Binance’s activities.

The regulatory scrutiny began in July 2020 when the CVM ordered Binance to halt its unauthorized activities in Brazil and threatened the company with a daily fine of 1,000 reais for non-compliance.

However, Binance continued to operate, leading to further action from the CVM. The regulator specifically highlighted the exchange’s operation without proper authorization for derivatives trading, which has seen a surge in popularity within Brazil’s rapidly growing crypto market.

In an attempt to resolve the matter, Binance proposed a settlement offer of $370,000 in August 2023. But the CVM’s Specialized Federal Attorney’s Office (PFE-CVM) identified a legal impediment to the agreement, as there was insufficient evidence that the alleged violations had ceased.

The CVM’s Settlement Committee (CTC) also noted the gravity of the alleged infractions, which included potential obstruction of regulatory oversight, and recommended rejecting the proposal.

The CVM ultimately rejected the offer, insisting on a more substantial penalty. A new settlement proposal was later offered to the exchange by the regulator in February.

Due to Brazil’s economic challenges, such as high inflation and a weakening currency, there has been a surge in crypto adoption in the country.

Faced with financial instability, Brazilians have increasingly turned to digital assets as a hedge against the declining value of the local fiat currency.

By 2021, an estimated 8% of Brazil’s population had invested in cryptocurrencies, ranking the country 14th globally in crypto adoption.

The Brazilian government has also taken steps to integrate crypto into the broader financial landscape. In 2020, the introduction of the Pix payment system, a real-time digital finance platform, further fueled the adoption of cryptocurrencies by making digital transactions more accessible and mainstream.

Despite the regulatory challenges, local crypto exchanges have also seen a rise in activity. With increasing digital literacy and familiarity with digital finance, crypto has become an alternative investment for many Brazilians.

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