The U.S. Department of Justice (DOJ) has proposed a three-year prison sentence for Changpeng Zhao, founder and former CEO of Binance, following his guilty plea to violating federal sanctions and money laundering laws. This recommendation comes despite Zhao’s defense team arguing for no jail time, citing his payment of fines and acknowledgment of responsibility.
DOJ’s Argument
In a sentencing memo, the DOJ emphasized the need for a significant penalty to deter similar misconduct, pointing out the vast rewards Zhao reaped from violating U.S. law. The filing highlighted how Binance facilitated illicit activities, including transactions from ransomware attacks and darknet markets, due to Zhao’s failure to implement an effective anti-money laundering (AML) program.
Scope of Misconduct
The DOJ argued that Zhao’s misconduct had massive ramifications, warranting an upward variance from the initial 18-month sentence outlined in his plea agreement. Despite Zhao’s claims of not being explicitly informed about specific criminal transactions on Binance, the filing asserted that he knew the exchange was violating the law and encouraged such behavior.
Defense Response
Zhao’s defense team pushed back, stating that Zhao was not aware of specific transactions involving criminal funds. They argued that Binance, as a non-U.S. company, was not prohibited from having users from sanctioned countries on its platform. Additionally, they emphasized Zhao’s lack of knowledge about the extent of illicit activities on the exchange.
Supporters and Sentencing
The defense presented letters of support from Zhao’s family members, former spouses, and prominent individuals like former U.S. Senator Max Baucus. Despite this, the DOJ maintains that Zhao should face imprisonment, citing the need for accountability and deterrence.
Upcoming Sentencing
Originally scheduled for late February, Zhao’s sentencing hearing was postponed to April 30. While he awaits his fate, Binance, the world’s largest crypto exchange, also faces its penalties, including a $4.3 billion fine and the appointment of a court-appointed monitor.
As the crypto industry faces increased regulatory scrutiny, the outcome of Zhao’s case could have significant implications for the sector’s future.
