Founder of Binance Recommended for 3-Year Prison Sentence by US Department of Justice
The United States Department of Justice (DOJ) has recommended a three-year prison sentence for Changpeng “CZ” Zhao, the founder and former chief executive of Binance, for his role in enabling the crypto exchange to violate federal sanctions and money laundering laws. The DOJ’s attorneys argued that Zhao should also pay a $50 million fine.
This recommendation comes as one of the officials of the crypto trading platform, Tigran Gambaryan, is facing trial on charges of tax evasion, money laundering, and foreign exchange contravention. Zhao had previously pleaded guilty to violating the Bank Secrecy Act, but his attorneys argued he should serve no jail time, suggesting probation instead.
The DOJ’s sentencing memorandum stated that an above-Guidelines sentence of 36 months is warranted for Zhao’s willful violation of U.S. law. The filing highlighted how Binance operated within the U.S. and the consequences of Zhao’s actions on national security. The DOJ argued that the sentence should send a message not only to Zhao but to the world about the consequences of violating U.S. law.
Zhao originally faced up to 18 months in prison under his plea agreement, but the DOJ argued for an upward variance due to the massive scope and ramifications of his misconduct. The filing pointed to how illicit actors used Binance’s exchange for various illegal activities, including hiding the source and ownership of cryptocurrency and transacting in illicit proceeds.
In addition to the sentencing recommendation for Zhao, Binance, the world’s largest crypto exchange, pleaded guilty to charges and agreed to a $4.3 billion fine. The Nigerian government has also accused Binance of aiding money laundering, leading to the arrest of company officials. One official, Nadeem Anjarwalla, escaped custody to Kenya but has been arrested, with extradition processes underway.
The case highlights the growing scrutiny on crypto exchanges and the consequences of violating laws related to money laundering and sanctions. The sentencing of Zhao and the actions taken against Binance serve as a warning to others in the industry about the importance of compliance with regulations.
