Binance Founder Changpeng Zhao Faces Impending Prison Sentence – What This Means For Crypto

Binance Founder Changpeng Zhao Faces Impending Prison Sentence – What This Means For Crypto

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May 1, 2024 by Editor's Desk
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Binance founder Changpeng Zhao is currently facing the threat of prison due to charges of alleged money laundering. While operating on US soil, Zhao’s crypto exchange, Binance, had allegedly provided aid to recognized terrorist organizations, such as Hamas, al Qaeda, and the Islamic State of Iraq and Syria, or ISIS, as well as unlicensed and
Binance Founder Changpeng Zhao Faces Impending Prison Sentence - What This Means For Crypto

Binance founder Changpeng Zhao is currently facing the threat of prison due to charges of alleged money laundering. While operating on US soil, Zhao’s crypto exchange, Binance, had allegedly provided aid to recognized terrorist organizations, such as Hamas, al Qaeda, and the Islamic State of Iraq and Syria, or ISIS, as well as unlicensed and illegal money transmission.

Department Of Justice Recommends 36 Months For Changpeng Zhao

Justice Department prosecutors want Binance founder Changpeng Zhao (CZ) to serve a three-year jail sentence for violating U.S. law on an “unprecedented scale.” While the former Binance CEO ought to receive a prison sentence of up to 18 months, federal prosecutors, however, argued that it “would not reflect the seriousness of Changpeng Zhao’s offense, nor will it offer any adequate specific or general deterrence.”

Citing internal comments made by Zhao about Binance not being “as big” if it complied with US laws, the federal prosecutors argued that Zhao made a willful “business decision” that breaking the law was “the best way to attract users, build his company, and line his pockets.”

Binance, which is currently the world’s largest cryptocurrency exchange, and its founder, Changpeng Zhao, pleaded guilty to violating anti-money laundering laws, unlicensed money transmitting, and sanctions violations laws in November 2023.

As part of a plea deal, Changpeng Zhao agreed to step down as Binance’s CEO, and the company agreed to pay a $4 billion settlement. Changpeng Zhao, who is a citizen of the UAE and Canada, was released on a $175 million bond but has been ordered to stay in the US.

At the time, the Department of Justice, in a filing with the US federal court in Seattle, maintained that a 36-month sentence would “hold Zhao accountable for his intentional criminal conduct” and would “not just send a message to Zhao but also the world.”

“Changpeng Zhao must face meaningful prison time if his sentence is to have a meaningful deterrent effect on similar executives of large financial institutions that are operating in the United States and flouting US law for profits,” the filing added.

Former SEC official John Reed Favors Prison Term For Binance Founder

Former SEC official John Reed has called attention to Changpeng Zhao’s upcoming April 30 sentencing, noting that serious questions about Binance’s operational integrity were raised by this purported contempt for legal obligations and noncompliance with the US financial regulatory system.

The SEC veteran stated that “the seriousness of Zhao’s offenses ought to be reflected in the sentence he receives.” He continued, “Financial institutions are the first line of defense for the US financial system.”

Zhao’s legal battle is significant to crypto; it means all eyes will be fixed on other big players in the cryptocurrency space, as the former CEO of Binance faces a possible 3-year sentence on April 30. This is similar to the precedent set by the conviction of FTX exchange founder Sam Bankman-Fried.

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