U.S. Prosecutors Seek 36-Month Prison Sentence for Binance Founder Changpeng Zhao

U.S. prosecutors are seeking a 36-month prison sentence for Changpeng Zhao, the founder and former CEO of Binance, the world's largest cryptocurrency exchange. In a court filing, prosecutors argued that an "above-guideline sentence of 36 months is warranted" given the "magnitude of Zhao's willful violation of U.S. law and its consequences."

Zhao pleaded guilty in November 2023 to violating U.S. anti-money laundering laws and sanctions. As part of the plea deal, Binance agreed to pay a $4.32 billion penalty, including a $1.81 billion criminal fine and $2.51 billion in restitution. Zhao also stepped down as Binance's CEO.

Why this matters: The case against Zhao and Binance sets a significant precedent for the cryptocurrency industry, as regulators increasingly scrutinize exchanges for compliance with anti-money laundering and sanctions laws. The outcome of this case could have far-reaching implications for the future of cryptocurrency regulation and enforcement.

Federal sentencing guidelines had set a maximum sentence of 18 months in prison for Zhao, but prosecutors are seeking a longer 36-month sentence. Zhao had previously agreed not to appeal any sentence up to 18 months.

Prosecutors allege that Binance failed to report over 100,000 suspicious transactions linked to designated terrorist groups like Hamas, al-Qaeda, and ISIS. They also claim Binance's platform was used for the sale of child sexual abuse materials and to receive a large portion of ransomware proceeds.

The Department of Justice stated that the recommended sentence "will not just send a message to Zhao but also to the world" and that the "price for violating US law must be significant to effectively punish Zhao for his criminal acts and to deter others."

Zhao is expected to be sentenced on April 30 in Seattle. He has been free on a $175 million bond after a judge previously denied his request to be released without bail.

In the wake of its U.S. case, Binance has pledged to make several changes to its structure and transparency, including the establishment of a global headquarters. The exchange also recently received full registration of its services in Dubai, after Zhao agreed to give up voting control in the local entity. The Department of Justice emphasized the severity of Zhao's violations and the importance of setting a deterrent for others in the cryptocurrency industry. Zhao's sentencing is set for April 30 in Seattle, and Binance has committed to making changes to improve its compliance and transparency.

Key Takeaways

• U.S. prosecutors seek 36-month prison sentence for Binance founder Changpeng Zhao.
• Binance agreed to pay $4.32B penalty for violating U.S. anti-money laundering laws and sanctions.
• Prosecutors allege Binance failed to report over 100,000 suspicious transactions linked to terrorist groups.
• Zhao expected to be sentenced on April 30, previously denied request for release without bail.
• Binance pledged changes to improve compliance and transparency after U.S. case.