The US Department of Justice (DoJ) has proposed a sterner sentence for Changpeng ‘CZ’ Zhao, the former CEO of Binance, recommending a three-year prison term for what it describes as “willful violation of U.S. law.” This recommendation, filed ahead of Zhao’s April 30 sentencing, underscores a critical stance against Zhao’s purported disregard for anti-money laundering laws.
Prosecutors argue that Zhao took significant risks under the assumption he could evade legal consequences. “He gambled that he would not get caught, and that if he did, the consequences would not be as serious as the crime,” they stated in the sentencing memo. The DoJ believes that Zhao’s approach contributed significantly to his personal wealth and status within the crypto sector, branding Binance’s compliance efforts as reminiscent of the “Wild West.”
This sentencing proposal exceeds the norm set by federal guidelines, which would have capped the sentence at 18 months. The Department highlights that this decision aims to deter similar misconduct globally, not just penalize Zhao alone. “This sentence will not just send a message to Zhao but also to the world,” noted the DoJ.
Zhao’s tenure at Binance saw the platform’s meteoric rise as the world’s largest cryptocurrency exchange by volume. His legal troubles began intensifying in November 2023, when he resigned following a guilty plea to charges of money laundering and violating sanctions, part of a broader settlement with the DoJ. The settlement further required Binance to forfeit $4.3 billion and cease all operations within the United States.
In addition to corporate penalties, Zhao was personally fined $50 million and barred from any association with Binance for three years. Ahead of his upcoming sentencing, he remains bound by a $175 million bond and strict travel restrictions, after being deemed a flight risk by U.S. District Judge Richard Jones.
Meanwhile, Binance continues to face legal challenges, including an ongoing lawsuit by the US Securities and Exchange Commission (SEC), which the exchange is actively seeking to dismiss through recent legal filings.
This case spotlights significant regulatory scrutiny within the cryptocurrency industry and serves as a potent reminder of the severe implications of non-compliance with U.S. law. As the crypto world watches, the outcome of Zhao’s sentencing could set a precedent for how similar cases are handled in the future.
