The U.S. Department of Justice (DOJ) has filed its sentencing memo in the lawsuit against Binance founder and former CEO Changpeng “CZ” Zhao.
According to the latest filing, the DOJ recommends that Washington federal Judge Richard A. Jones sentence CZ to three years in prison and impose a $50 million fine in light of his violation of U.S. money laundering rules.
Prosecutors also argued that Zhao played a significant role in enabling Binance to violate the country’s federal sanctions. However, attorneys representing CZ filed an opposition hours later, noting that the former Binance executive does not deserve a prison sentence but probation.
DOJ Wants Increased Jail Term for Binance founder
In November 2023, Binance pleaded guilty to violating U.S. money laundering laws, prompting the exchange to agree to pay $4.3 billion as part of a settlement deal. In a similar development, CZ pleaded guilty to money laundering-related charges brought by the DOJ.
Following his pleading agreement, CZ initially faced up to 18 months in prison, with a fine of $50 million. He also resigned as Binance’s CEO. However, the DOJ wants the prison sentence extended to 36 months (three years). They argue that CZ not only knew about Binance’s violation of money laundering rules but also encouraged it.
The prosecutors claim that the Binance founder benefitted massively from the exchange’s violation of U.S. laws. As such, they recommended that he pays a significant price for it.
By imposing a 3-year prison sentence and a $50 million fine against CZ, the DOJ claims the court would indirectly send a strong warning to the Binance founder and potential violators globally.
Notably, the DOJ contended that CZ’s failure to implement effective AML (anti-money laundering) protocols at Binance allowed bad actors to facilitate illicit transactions via the world’s largest crypto exchange by 24-hour trading volume.
Zhao’s Lawyers Seek Probation
On the contrary, the defense counsel argued that their client had zero knowledge of any criminal-related transaction on the platform.
The defense team contended that despite Binance’s compliance officer informing CZ that the exchange had users from countries sanctioned by the U.S., the exchange was never prohibited from onboarding users from those U.S.-sanctioned nations, as Binance is a non-U.S. exchange.
Furthermore, CZ’s lawyers stressed that the charges Binance pleaded to stemmed from its machine automatically pairing users from U.S.-sanctioned countries with other U.S.-based clients.
Nonetheless, they pointed out that these transactions only represent a small fraction of Binance’s total volume. Consequently, CZ’s lawyers pleaded with Judge Jones not to impose a 3-year jail term on their client. Instead, they urged Judge Jones to sentence their client to probation in the form of confinement in his Abu Dhabi home.
In the meantime, the Binance founder and over 160 people, including his family and friends, have sent letters to the judge seeking leniency.
The highly anticipated sentencing of the former Binance CEO was initially scheduled for February 2024. However, following a mutual agreement, the hearing was postponed to April 30.
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