US prosecutors have recently filed a request for a three-year prison sentence for Changpeng Zhao, the founder of Binance, according to a court filing made on Tuesday. This development comes as Zhao is set to face sentencing on April 30th in Seattle, following his guilty plea in November for violating US anti-money laundering regulations. Despite stepping down from his position as CEO of the cryptocurrency exchange, Zhao still maintains majority ownership.
As part of the agreement reached, Zhao consented to pay a hefty $50 million fine, while Binance, the company he founded, has offered to pay a staggering $4.3 billion in fines and compensation. The severity of Zhao’s deliberate breach of US laws and its far-reaching consequences, as highlighted by US prosecutors, justify an above-Guidelines sentence of 36 months, they argued.
Prosecutors are advocating for a more severe penalty for the crimes committed by the cryptocurrency mogul.
Initially facing a maximum of 18 months behind bars, Zhao acquiesced to this condition without seeking an appeal. However, in November, he secured his release on a staggering $175 million bail while awaiting sentencing for his breaches of banking laws. Despite this provisional freedom, he remained subject to stringent travel restrictions within the United States.
Presently, prosecutors are pushing for a more stringent punishment for Zhao than what the federal sentencing guidelines stipulate. Their filing emphasizes the substantial gains Zhao accrued through his transgressions of US laws, asserting that the consequences of his actions must be substantial to effectively penalize him for his criminal conduct and to serve as a deterrent to others who may be enticed to amass wealth and business empires through unlawful means.
According to prosecutors, Zhao failed to establish a robust anti-money laundering (AML) program at Binance, purportedly allowing nefarious actors to exploit the exchange. Allegedly, these actors utilized Binance for various illicit activities, including operating mixing services aimed at obfuscating the origins of cryptocurrencies.
Furthermore, prosecutors allege that Binance facilitated transactions between Iranian customers and their counterparts in the United States, thereby undermining US sanctions against Iran and potentially compromising the liquidity of the exchange.
Shortcomings in operations and failures in reporting.
In February, a settlement addressed significant operational deficiencies identified within Binance. Notably, these deficiencies encompassed the platform’s failure to report over 100,000 suspicious transactions associated with designated terrorist organizations, such as Hamas, al Qaeda, and ISIS.
Furthermore, Binance was accused of facilitating transactions involving child sexual abuse materials and proceeds from ransomware activities.
Despite encountering legal challenges, Changpeng Zhao’s wealth has undergone substantial growth in the past year, increasing by nearly $10 billion according to the Bloomberg Billionaires Index. Presently, his net worth exceeds $42 billion, ranking him as the 29th wealthiest individual globally, as per the index.
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