May 01, 2024

Former Binance Boss CZ Binance Stands a Chance of 36 Months in Prison

  • Under his leadership, Binance grew to become the largest crypto exchange in the world by trading volume. The US government hit it with criminal charges, subsequently implicating CZ Binance.
  • The DOJ requested at least 36 months in jail. Zhao’s legal representatives rejected the recommendation.

After the FTX debacle, one of the biggest issues facing the crypto industry is the legal tussle between the DOJ, Binance, and their former boss. The DOJ filed a recommendation to see Changpeng Zhao spend at least 36 months in jail for his criminal charges.

DOJ Recommends 3 Years in Prison for CZ Binance’s Crypto Violations

The U.S. Department of Justice said Tuesday night that the former CEO of the largest crypto trading exchange, CZ Binance, should spend at least 36 months in prison for his crimes. Indeed, this would tally with the accusations that Changpeng Zhao had facilitated money laundering and the violation of federal sanctions.

The legal team representing the DOJ made their views known through a sentencing memo. They demanded that the former Binance boss be jailed and pay a fine of $50 million. He had previously pleaded guilty to the Bank Secrecy Act in November 2023.

The majority of the accusations against the embattled crypto exchange were that they failed to implement necessary AML programs. Moreover, this allowed cybercriminals and other darknet agents to move illegal funds in and out of the exchange.

In the DOJ filing, they claim spending three years in jail will serve as a lesson to others seeking to make illegal wealth in the United States.

“The sentence in this case will not just send a message to Zhao but also to the world. Zhao reaped vast rewards for his violation of U.S. law, and the price of that violation must be significant to effectively punish Zhao for his criminal acts and to deter others who are tempted to build fortunes and business empires by breaking U.S. law,” the filing revealed.

Former Binance CEO Defense Pushes Back

The legal attorney representing the former Binance CEO released their own counter-sentencing memo, refuting the claims of the DOJ. They claimed CZ wasn’t “informed” of certain criminal transactions that went on within the crypto exchange. Furthermore, the defense highlighted that the said criminal transactions constituted a tiny portion of the total Binance trading volume. Hence, Mr Zhao couldn’t be aware of them.

“Although Probation references a conversation in which Binance’s chief compliance officer warned Mr. Zhao that there were users from sanctioned countries on … the reality is that Binance, as a non-U.S. company, was not prohibited from having users from U.S.-sanctioned countries on its platform,” the filing added. At the end of the filing, a few supporters were included. Some of them are former US senator Max Baucus, his former wife Yang Weiqing, Yi He, the mother of three of his children, and his two adult children.

The latest development comes after Binance’s co-founder He Yi suggested last week that CZ’s situation was stabilizing. Thus, the new events are contrasting and do not look good for Binance and the broader crypto market. Binance’s former boss was supposed to be sentenced in late February, but it was shifted to April 30th.

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