Violet Vallaya
The U.S. Department of Justice has recommended a three-year prison sentence for Changpeng “CZ” Zhao, the founder and former CEO of Binance. This recommendation follows Zhao’s guilty plea last year for violating the Bank Secrecy Act.
As per a filing by DOJ attorneys on Tuesday evening, the department is seeking that Zhao serve a 36-month prison term and pay a $50 million fine. The filing emphasized that the sentence’s significance extends beyond Zhao, serving as a deterrent against future misconduct worldwide.
The filing outlines the DOJ’s assessment of the sentencing guidelines, acknowledging that they typically propose a range of 12 to 18 months. However, it highlights Zhao’s awareness of Binance’s legal violations and his active role in promoting them.
Zhao, who initially faced a maximum of 18 months in prison under the terms of his plea agreement, is now confronted with the possibility of a much lengthier sentence. CZ had previously consented to the $50 million fine.
The filing emphasizes the magnitude of Zhao’s transgressions, highlighting how he presided over a massive financial institution that processed trillions of dollars in cryptocurrency trades annually, all while violating U.S. regulations. The DOJ argues that Zhao’s deliberate disregard for legal obligations enabled Binance to handle millions of dollars in unlawful proceeds, including funds from darknet markets and crypto mixers.
It also states that the scale of Zhao’s misconduct warrants an “upward variance,” pointing to Binance’s massive processing of cryptocurrency trades and its large profits from U.S. businesses and customers.
Central to the DOJ’s argument is Zhao’s failure to implement an effective anti-money laundering (AML) program at Binance, which led to the exchange becoming a hub for illegal activities, including transactions related to ransomware attacks, darknet market proceeds, and various scams.
The case revolves around Binance’s failure to implement an effective Anti-Money Laundering (AML) program, which allowed illicit actors to exploit the exchange for various criminal activities.
The saga began when Binance, founded by Changpeng “C.Z.” Zhao, faced allegations of failing to implement an effective AML program. Illicit actors exploited Binance’s exchange for various purposes, including operating mixing services that obscured the source and ownership of cryptocurrency. The exchange was also implicated in transacting illicit proceeds from ransomware variants, darknet market transactions, exchange hacks, and internet-related scams.
Last November, CZ stepped down as CEO and pleaded guilty as part of the settlement agreement. His sentencing, originally scheduled for Feb. 23, was postponed to April 30. Currently out on a $175 million bond, CZ faces money laundering sanctions violation charges. While awaiting sentencing, he is barred from any present or future involvement in operating or managing businesses related to Binance.
As the crypto community awaits CZ’s fate, the Binance case serves as a stark reminder of the importance of robust compliance measures in the rapidly evolving world of digital assets.
