U.S. Department of Justice Recommends Three-Year Prison Sentence for Binance Founder CZ Zhao
The U.S. Department of Justice (DOJ) has recommended a three-year prison sentence for Changpeng “CZ” Zhao, the founder and former Chief Executive Officer of Binance, following his guilty plea last year for violating the Bank Secrecy Act.
In documents filed by DOJ attorneys on Tuesday night, Zhao is facing a 36-month prison term and a $50 million fine. The filing emphasized the need for a severe penalty to deter similar misconduct in the future, stating that the sentence will not only send a message to Zhao but also to the world.
The DOJ’s assessment of the sentencing guidelines acknowledged that they typically propose a range of 12 to 18 months but highlighted Zhao’s awareness of Binance’s legal violations and his active role in promoting them. The filing also criticized the Sentencing Guidelines for failing to adequately penalize violations of the Bank Secrecy Act and their potential impact on U.S. national security.
Zhao, who initially faced a maximum of 18 months in prison under his plea agreement, now faces the possibility of a much lengthier sentence. He had previously agreed to the $50 million fine and waived his right to appeal any sentence up to 18 months.
The DOJ’s argument against Zhao emphasizes the magnitude of his transgressions, noting that he presided over a financial institution that processed trillions of dollars in cryptocurrency trades annually while violating U.S. regulations. The filing also highlights Binance’s handling of millions of dollars in unlawful proceeds, including funds from darknet markets and crypto mixers.
Central to the DOJ’s argument is Zhao’s failure to implement an effective anti-money laundering program at Binance, leading to the exchange becoming a hub for illegal activities such as ransomware attacks, darknet market proceeds, and various scams.
Despite the initial sentencing schedule set for late February, it has been postponed to April 30 by mutual agreement. Meanwhile, Binance faces its own repercussions, including a $4.3 billion fine and the pending appointment of a court-appointed monitor in conjunction with Zhao’s guilty plea.
