Binance Founder Changpeng Zhao Should Face 3-Year Prison Sentence: DOJ
The U.S. Department of Justice (DOJ) has recommended that Changpeng “CZ” Zhao, the founder and former CEO of Binance, spend three years in prison.
The DOJ recommended a 3-year prison sentence for Zhao due to his role in enabling the cryptocurrency exchange to violate federal sanctions and money laundering laws.
In a sentencing memo filed on Tuesday night, DOJ attorneys argued for a 36-month prison term and a $50 million fine. This is following Zhao’s guilty plea to violating the Bank Secrecy Act in November 2022.
Key points:
- The DOJ is seeking a 3-year prison sentence and a $50 million fine for Changpeng Zhao.
- Zhao was initially subject to a maximum prison sentence of 18 months, as specified in his plea bargain.
- The prosecution cites the use of Binance by illicit actors for mixing services, ransomware transactions, and moving proceeds from darknet markets and exchange hacks.
Also read: Crypto Industry Groups Sue SEC Over Expanded ‘Dealer’ Definition
DOJ says the former Binance CEO reaped vast rewards for his violation
The prosecution argues that Zhao reaped vast rewards for his violation of U.S. law, and the sentence should reflect the gravity of his misconduct.
According to the DOJ, Zhao’s failure to implement an effective anti-money laundering (AML) program at Binance allowed illicit actors to use the exchange for various nefarious purposes.
These include operating mixing services to hide the source and ownership of cryptocurrency, transacting illicit proceeds from ransomware attacks, and moving proceeds from darknet market transactions, exchange hacks, and various internet-related scams.
Read more: Crypto.Com Faces Money Laundering Inspection, Delay South Korean Launch
The sentencing memo also criticizes the Sentencing Guidelines for not adequately addressing misconduct on this scale or misconduct that harms U.S. national security. The DOJ argues that Zhao knew Binance was violating the law and encouraged it, warranting an upward variance from the recommended 12 to 18 months under the guidelines.
Zhao’s sentencing hearing, originally scheduled for late February, was postponed by mutual agreement to April 30. Alongside Zhao’s personal plea, Binance, the world’s largest crypto exchange, also pleaded guilty to charges of its own. The exchange also agreed to a $4.3 billion fine.
