US prosecutors are seeking a 3-year prison term for Binance founder Changpeng Zhao for breaching US anti-money laundering laws. Zhao is scheduled for sentencing on April 30 in Seattle, having pleaded guilty in November. As part of the agreement, he agreed to a $50m fine, while the company offered to pay $4.3b in fines and compensation. Prosecutors are pushing for a harsher punishment for Zhao, citing the magnitude of his willful violation of US law.
Zhao was initially set to face up to 18 months in prison, a condition he accepted without appeal. In November, he was released on a $175m bail while awaiting sentencing for banking law breaches. Prosecutors now want a more severe penalty for him than what the federal sentencing guidelines recommend. They claim that Zhao neglected to establish a robust anti-money laundering program at Binance, enabling illicit actors to exploit the exchange for activities like concealing crypto origins and enabling transactions between Iranian and US customers.
In February, a settlement addressed significant operational deficiencies found within Binance, including the platform’s failure to report suspicious transactions linked to designated terrorist organizations. The exchange also faced allegations of facilitating transactions related to child sexual abuse materials and proceeds from ransomware activities. Despite these legal obstacles, Zhao’s fortune has grown significantly over the past year, surging by nearly $10b according to the Bloomberg Billionaires Index. Currently, his wealth exceeds $42b, making him the 29th wealthiest individual worldwide.
Zhao stepped down from his role as CEO at Binance but retains majority ownership of the company. Prosecutors argue that the price of his violation of US law must be significant to effectively punish him for his criminal acts and deter others from similar actions. They claim that Zhao’s actions have undermined US sanctions against Iran and jeopardized exchange liquidity. Binance did not provide a comment on the situation by press time, and Zhao is expected to receive a harsher sentence than initially anticipated.
The prosecutors are pushing for a 36-month prison sentence for Zhao, while the federal sentencing guidelines recommend a maximum of 18 months. Zhao’s failure to establish an effective anti-money laundering program at Binance allowed illicit actors to exploit the platform, leading to various illegal activities. Despite the legal challenges faced by Zhao and Binance, Zhao’s personal wealth has continued to grow significantly over the past year, solidifying his status as one of the world’s wealthiest individuals. The sentencing for Zhao is scheduled for April 30, and he is expected to face a more severe penalty than originally anticipated.
