• 03 December, 2024
News

Binance Founder Zhao Faces Up to 36 Months in Prison, Foregoing Right to Appeal

Binance Founder Zhao Faces Up to 36 Months in Prison, Foregoing Right to Appeal

Changpeng Zhao, the founder of Binance, the world’s largest cryptocurrency exchange, pleaded guilty to violating U.S. anti-money laundering laws. Following his guilty plea, the U.S. Department of Justice (DoJ) has recommended a sentence of 36 months in prison for Zhao. The recommendation was filed on Tuesday in the U.S. District Court for the western district of Washington.

The authorities highlighted that under Zhao’s leadership, Binance failed to report over 100,000 suspicious transactions linked to terrorist organizations such as Hamas, al Qaeda, and ISIS. Stressing Zhao’s “willful” violation of U.S. regulations, the DOJ wrote:

He made a business decision that violating U.S. law was the best way to attract users, build his company, and line his pockets.

Further legal breaches outlined by the prosecutors include Binance’s facilitation of transactions related to child sexual abuse materials and the platform being a significant recipient of ransomware payments. The filing accused Zhao and Binance of knowingly targeting U.S. users to expand their operations, fully aware that such actions would subject them to U.S. jurisdiction and regulations.

The filing also mentioned that Zhao himself has conceded that disregarding U.S. regulations was integral to Binance’s growth strategy, which contributed to the company’s profitability and expansion over the last two years. He cited the importance of the network effect in enhancing Binance’s revenue, which would have been constrained by compliance with U.S. laws.

Zhao has already agreed to a $50 million fine. According to the prosecutors’ filing, it aligns with the necessary legal standards to achieve the objectives of sentencing under 18 U.S.C. § 3553(a).

U.S. Code 18 U.S.C. § 3553(a) is a legal framework that courts consider when sentencing, comprising factors like the nature of the crime and the defendant’s history. In this instance, the code directs the court to consider factors such as the severity of Changpeng Zhao’s offenses, his past behavior, and the necessity to protect the public and deter future violations.

Despite federal guidelines suggesting a maximum of 18 months for such offenses, Zhao consented to the possibility of a longer sentence without the right to appeal, provided it did not exceed the proposed 36 months. At the time of publication, he remains on a $175 million bond in the U.S.

In November 2023, Zhao stepped down from his role as CEO at Binance after admitting to the money laundering charges. Binance and Zhao consented to settle the criminal proceedings with the DOJ by paying the U.S. government $4.3 billion. This settlement permitted Binance to continue operations within legal bounds, provided they adhere to U.S. regulations moving forward.

Binance Burns 1.94M BNB Tokens: Will It Propel Price Surge?
Read Previous

Binance Burns 1.94M BNB Tokens: Will It Propel Price Surge?

Polygon (MATIC) Sees Downward Shift in MVRV Z-Score Ratios
Read Next

Polygon (MATIC) Sees Downward Shift in MVRV Z-Score Ratios