US wants 3 years in prison for Binance founder Changpeng Zhao

US prosecutors want Changpeng Zhao, the founder and former CEO of Binance, the world’s largest cryptocurrency exchange, to serve three years in prison after pleading guilty to violating anti-money laundering laws.

Prosecutors made the request Tuesday night in federal court in Seattle.

They said sentencing Zhao to twice the maximum 18 months recommended under federal guidelines would reflect the magnitude of his willful violations and send a message that “the right choice, every time, is to obey the law.”

Zhao’s lawyers asked for probation. U.S. District Judge Richard Jones is expected to sentence Zhao on April 30.

Once the most influential figure in the crypto industry, Zhao, 47, stepped down as head of Binance last November when he and the exchange admitted to avoiding anti-money laundering requirements under the Bank Secrecy Act.

Binance agreed to a $4.32 billion penalty.

Prosecutors said Binance, using a “Wild West” model that welcomes criminals, failed to report more than 100,000 suspicious transactions with certain terrorist groups, including Hamas, al-Qaeda and the Islamic State in Iraq and Syria, or ISIS.

They also said Zhao’s platform also supports the sale of child sexual abuse material and is the recipient of much of the ransomware revenue.

“He made a business decision that breaking American law was the best way to attract consumers, build his company and line his pockets,” prosecutors said.

In seeking leniency, Zhao’s lawyers cited the first-time offender’s “unwavering” take on responsibility, his $50 million criminal fine and that no defendant in a similar case had been jailed.

They also said Zhao has made Binance an industry leader in compliance, “despite the initial failures that led to this prosecution.” Zhao founded Binance in 2017.

He was released on $175 million bond and agreed not to appeal any sentence within federal guidelines.

Binance’s penalty includes a $1.81 billion criminal fine and $2.51 billion in restitution. Zhao also paid $50 million to the U.S. Commodity Futures Trading Commission, his lawyers said.

The case is United States v. Zhao, U.S. District Court, Western District of Washington, No. 23-cr-00179.

© Thomson Reuters 2024