US prosecutors are pushing for a 3-year prison sentence for Binance founder Changpeng Zhao, who pleaded guilty in November to breaching US anti-money laundering laws. Zhao stepped down as CEO of the crypto exchange but still holds majority ownership. As part of the agreement, he agreed to a $50 million fine, while the company offered to pay $4.3 billion in fines and compensation. Prosecutors believe an above-guideline sentence is warranted due to the magnitude of Zhao’s violation of US law and its consequences.
Initially set to face up to 18 months in prison, Zhao accepted the conditions without appeal. He was released on a $175 million bail in November while awaiting sentencing for banking law breaches, with restrictions on travel within the US. Prosecutors are now seeking a tougher penalty for him than what federal sentencing guidelines recommend, citing his vast rewards from violating US law and the need for a significant punishment to deter others from similar criminal acts.
Prosecutors allege that Zhao failed to establish a robust anti-money laundering program at Binance, allowing illicit actors to exploit the exchange for activities like operating mixing services to conceal crypto origins. They also claim that Binance facilitated transactions between Iranian customers and US customers, undermining US sanctions against Iran and compromising exchange liquidity. In February, a settlement addressed operational deficiencies at Binance, including failures to report suspicious transactions linked to designated terrorist organizations, child sexual abuse materials, and ransomware activities.
Despite legal challenges, Zhao’s wealth has grown significantly over the past year, with his fortune increasing by nearly $10 billion according to the Bloomberg Billionaires Index. Currently, his wealth exceeds $42 billion, making him the 29th wealthiest individual worldwide. Binance did not respond to requests for comments on the situation. Zhao faces potential imprisonment and financial penalties for his role in the violations of US anti-money laundering laws and operational failures at the crypto exchange. The sentencing hearing is scheduled for April 30 in Seattle.
