Changpeng Zhao, the former CEO of crypto exchange Binance, could face a decade behind bars.
The revelation comes after the US Department of Justice’s (DOJ) recent court filings, indicating a possible ten-year sentence for Zhao.
Binance’s Changpeng Zhao Could Spend a Decade in Jail
The former CEO of Binance, Changpeng Zhao, pleaded guilty to one count of violating the Bank Secrecy Act. This charge arises from Binance’s involvement in a vast global criminal enterprise, according to the DOJ.
The company agreed to a historic $4.3 billion fine, setting a new benchmark in US Treasury and FinCEN history. Binance also committed to a rigorous series of compliance, monitoring, and cooperation requirements as part of a plea agreement.
“On that note, I am proud to point out that in our resolutions with the US agencies, they do not allege that Binance misappropriated any user funds, and do not allege that Binance engaged in any market manipulation. Funds are SAFU,” Zhao said.
Still, legal experts anticipate a 12 to 18-month sentence for Zhao at a minimum-security prison. Moreover, a recent DOJ filing highlighted Zhao’s potential flight risk, given his UAE citizenship and considerable wealth.
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The DOJ advocates for stringent pre-sentencing restrictions as the “United States is free to argue for any sentence up to the statutory maximum of ten years.”
“Should Mr. Zhao decide not to return to the United States to face an uncertain sentence, there is no reason to believe that the UAE would hand him over. The government respectfully requests the Court require Mr. Zhao to remain in the continental United States in the period between his plea and sentencing,” DOJ lawyers argued.
The DOJ’s stance comes after Magistrate Judge Brian Tsuchida’s contentious decision to permit Zhao to reside in the UAE until two weeks before sentencing.
Judge Tsuchida emphasized that Zhao’s actions “speak louder than the worries.” He stated Zhao had no obligation to go to the US, but he did as his intent was “to resolve this case, not run.”
“Based on all the relevant facts, including Mr. Zhao’s voluntary self-surrender, his intent to resolve this case, and the sizable bail package he proposed, Judge Tsuchida found that Mr. Zhao presents no risk of flight, even while residing in the UAE,” the filing reads.
However, the DOJ expressed frustration, highlighting the rarity of allowing a billionaire defendant to face prison time and residing in a non-extraditing country with such freedom.
Zhao’s case is further complicated by Binance’s egregious violations, including failing to prevent transactions with terrorists and other criminals. The DOJ accused Zhao of enabling horrendous crimes, drawing parallels between Binance’s actions and acts of mass destruction.
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Zhao’s sentencing hearing is set for February 23, 2024. The impending decision by Judge Richard A. Jones on Zhao’s pre-sentencing travel will be pivotal. While Zhao’s legal team may push for leniency, the DOJ will likely seek a sentence that serves as a deterrent against future money laundering in the cryptocurrency world.
“I would not be surprised if CZ fails to cooperate, violates his plea conditions or takes some other action to blow up his plea arrangement. But most importantly, the stark reality is that if DOJ does not secure a sentence for CZ that deters future money laundering conduct in the cryptoverse, then this “plea deal” could end up backfiring on DOJ,” former SEC official John Reed Stark said.
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