Changpeng Zhao (CZ), founder and former Chief Executive Officer (CEO) of Binance, is on the verge of facing a possible three-year jail term, having pleaded guilty to wilful violation of anti-money laundering laws in the United States.
Contrary to the constitutionally recommended maximum punishment of 18 months for offenses similar to that perpetrated by Zhao, the U.S. prosecutors are bent on seeing that the former CEO receives a harsher prison term.
According to a sentencing document that has attracted considerable attention, the U.S. prosecutors are proposing a 36 months jail term and a $50 million penalty fee for the former CEO, citing that taking a stricter punishment would reflect the magnitude of his offenses, particularly the intentionality in defaulting, and adding that it would serve as a warning to others that might be considering options of circumventing laid down principles.
Binance Expansion At The Expense Of Regulatory Compliance
Aside from suggesting a harsher punishment, the released document delved into the former CEO's escapades that depicted his interest in attracting users to the trading platform rather than regulatory compliance. Part of the statement read thus, “Zhao’s willful violation of U.S. law was no accident or oversight. He made a business decision that violating U.S. law was the best way to attract users, build his company, and line his pockets.”
CZ failed to register Binance with the U.S. regulators, neglected the U.S. anti-money-laundering requirements, while also ignoring the implementation and maintenance of an effective know-your-customer (KYC) system, all in a bid to conceal suspicious transactions, especially those involving terrorist groups like Hamas, al Qaeda, and ISIS.
Court To Decide CZ's Fate Within The Week
As the situation stands, the final decision lies in the hands of the court, as it will be meting out its final ruling on April 30, 2024. An 18-month prison sentence seems probable, considering constitutional requirements. However, with the new directives and evidence from U.S. prosecutors, the court might opt for a harsher sentencing that might result in another round of appeals from the accused.
Notably, Zhao has surrendered his right to appeal any sentence within 18 months. Anything other than the already anticipated jail term would invariably result in the accused seeking judicial means to redress the ruling.
CZ's Team Responds, Proposes Probation Punishment
Reacting to claims and accusations from the U.S. prosecutors, CZ's legal team asserted that their client lacks knowledge of the alleged criminally inclined transactions happening on Binance during his tenure as the CEO.
The defense team argued that while the former CEO was informed of accommodating users from nations sanctioned by the United States, the trading platform remains an independent outlet, affording it the right to onboard users from any part of the globe.
Going further, the defense counsel urged the presiding judge to discard the three years jail-term against their client, suggesting a milder punishment, which entails sentencing the former CEO to probation, which would be in the form of confinement in his Abu Dhabi residence.
