Binance founder Changpeng Zhao to spend 3 years in prison

Binance founder and former CEO Changpeng «CZ» Zhao should spend three years in prison for his role in causing the cryptocurrency exchange to violate federal sanctions and money-laundering laws, the U.S. Justice Department said Tuesday night. Attorneys for the former CEO argued that he should not serve jail time, citing the fine he paid and his «exceptional admission of responsibility».
DOJ attorneys filed a sentencing brief arguing that he should spend 36 months in prison and pay a $50 million fine after he pleaded guilty to violating the Bank Secrecy Act last November. Hours later, Zhao’s defense team filed its own sentencing brief, arguing that «no defendant in a remotely similar BSA case has ever been sentenced to prison time». Instead, they proposed sentencing him to probation, which could include home confinement in his Abu Dhabi home.

They suggested he be sentenced to probation, which could include home confinement in his Abu Dhabi home.

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«The verdict in this case will send a message not only to Zhao, but also to the world. Zhao received a huge reward for violating U.S. law, and the cost of that violation must be significant to effectively punish Zhao for his criminal actions and deter others who are tempted to build fortunes and business empires by violating U.S. laws» — the statement said.

The statement said.

under the terms of the plea agreement, Zhao initially faced up to 18 months in prison. The Justice Department said Tuesday that «the scope and consequences of Zhao’s misconduct were enormous» therefore «an upward departure» is appropriate in this case.

An upward departure is appropriate.

«Due in part to Zhao’s failure to implement an effective AML program at Binance, illicit actors exploited the Binance exchange in a variety of ways, including operating mixing services that concealed the source and ownership of cryptocurrency; making illegal transactions with proceeds from ransomware attacks; moving proceeds from darknet transactions, exchange hacks and various internet fraud» — the statement said, pointing to the movement of funds from darknet markets and cryptomixers.

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Most of the document repeats arguments made by the DOJ when it first announced charges against Binance and Zhao last year, pointing to the way the exchange operated in the U.S.

The document also cites the DOJ’s sentencing calculations, noting that 12 to 18 months is recommended under the guidelines, but saying Zhao knew Binance was breaking the law and encouraged it.

The document also cites the DOJ’s sentencing calculations, noting that 12 to 18 months is recommended, but saying Zhao knew Binance was breaking the law and encouraged it.

The statement also said of how the Sentencing Guidelines address violations of the Bank Secrecy Act: «They are not designed to adequately punish misconduct of this magnitude or misconduct that harms U.S. national security». A $50 million fine has already been agreed to by both the prosecution and Zhao’s defense team. Zhao has also waived the right to appeal any sentence for up to 18 months.

And Zhao has waived the right to appeal any sentence.