The U.S. Department of Justice (DOJ) is seeking a 36-month prison sentence for Changpeng Zhao, the former CEO of Binance, the world’s largest cryptocurrency exchange. This proposed sentence is double the high end of the advisory guidelines range of 12-18 months, reflecting the severity of the charges against Zhao.
TLDR
- U.S. prosecutors are seeking a 36-month prison sentence for former Binance CEO Changpeng Zhao, which is double the high end of the advisory guidelines range of 12-18 months.
- Prosecutors argue that a longer sentence is warranted due to the “unprecedented scale” and “gravity” of Zhao’s crimes, which enabled money laundering and violations of U.S. sanctions.
- Zhao pleaded guilty last November to violating the Bank Secrecy Act and agreed to pay a $50 million fine, while Binance agreed to pay $4.3 billion in fines and forfeiture.
- The Department of Justice (DOJ) alleges that Binance facilitated transactions involving illicit funds from ransomware attacks, darknet markets, and other criminal activities.
- Zhao’s defense team argues that he should receive probation instead of prison time, citing his acceptance of responsibility and the fine he paid.
Prosecutors argue that a longer sentence is warranted due to the “unprecedented scale” and “gravity” of Zhao’s crimes, which enabled money laundering and violations of U.S. sanctions. In a sentencing memorandum filed on Tuesday, the DOJ stated that a 36-month sentence “would reflect the seriousness of the offense, promote respect for law, afford adequate deterrence, and be sufficient but not greater than necessary to achieve the goals of sentencing.”
Zhao stepped down as Binance’s CEO in November 2022 after reaching a plea deal with the DOJ. He pleaded guilty to violating the Bank Secrecy Act, which requires financial institutions to implement effective anti-money laundering programs. As part of the plea deal, Zhao agreed to pay a $50 million fine and cease involvement with Binance. The exchange itself pleaded guilty to separate charges and agreed to pay $4.3 billion in fines and forfeiture.
The DOJ alleges that under Zhao’s leadership, Binance operated on a “Wild West” model, deliberately disregarding its legal responsibilities and enabling financial crimes on an unprecedented scale. Prosecutors claim that Binance’s platform was used for various illicit activities, including operating crypto mixing services to hide the source of funds, processing proceeds from ransomware attacks, and facilitating transactions on darknet markets.
In their sentencing memorandum, prosecutors stated, “Zhao bet that he would not get caught, and that if he did, the consequences would not be as serious as the crime. But Zhao was caught, and now the Court will decide what price Zhao should pay for his crimes.”
The DOJ’s sentencing recommendation is significantly higher than the advisory guidelines, which typically recommend a maximum of 18 months for Bank Secrecy Act violations. Prosecutors argue that the guidelines are not designed to adequately punish misconduct on the scale of Zhao’s crimes, which they claim harmed U.S. national security.
JUST IN: 🇺🇸 Binance founder Changpeng Zhao (CZ) faces 3 years in prison after pleading guilty to violating money laundering laws – Reuters pic.twitter.com/MsCWPnGqSy
— Radar🚨 (@RadarHits) April 24, 2024
Zhao’s defense team has pushed back against the proposed sentence, arguing that he should receive probation instead of prison time. In their own sentencing memorandum, Zhao’s attorneys cited his “extraordinary acceptance of responsibility” and the $50 million fine he agreed to pay. They also claimed that Zhao did not knowingly facilitate specific transactions involving criminal funds, and that the sanctioned transactions on Binance’s platform made up a “microscopically tiny portion” of its overall trading volume.
The defense team further argued that Zhao does not pose a risk of reoffending and that “no defendant in a remotely similar BSA case has ever been sentenced to incarceration.” They suggested that Zhao could be sentenced to probation, which may include home confinement in Abu Dhabi, where he currently resides.
Zhao’s sentencing is scheduled for April 30 in Seattle, where he has been unable to return to Dubai, where his partner and some of his children live, since first appearing in federal court last year.
The case against Zhao and Binance has drawn significant attention from the crypto community and regulatory bodies, as it represents one of the most high-profile enforcement actions against a major cryptocurrency exchange. The outcome of Zhao’s sentencing could set a precedent for how future cases involving crypto-related financial crimes are handled by U.S. authorities.
