The Seattle federal court has announced a postponement in the sentencing of Changpeng Zhao, the Binance founder, now rescheduled for late April 2024. Zhao faces charges, including money laundering, amidst a crackdown by the U.S. Securities and Exchange Commission (SEC). Initially set for the end of February, the sentencing has been delayed, with the reasons not disclosed in the court documents.
Federal sentencing guidelines suggest Zhao could face up to 18 months in prison, yet the prosecution has the liberty to advocate for a sentence up to the statutory maximum of ten years. This stance indicates a potential for a more severe punishment than the guidelines suggest. Despite this, Zhao’s legal team is expected to request leniency, possibly arguing for no jail time or an alternative sentence that includes home detention and probation.
Zhao’s attempts to navigate his legal challenges include multiple denied requests to return to the United Arab Emirates. U.S. District Judge Richard Jones has rejected these requests, highlighting Zhao’s wealth and lack of ties to the U.S. as factors that contribute to him being a flight risk. Notably, Zhao offered all his equity in Binance.US, valued at approximately $4.5 billion, as collateral to secure his return, underscoring the high stakes of his legal battle.
Zhao, who is currently free on a $175 million release bond in the United States, admitted to failing to maintain an effective anti-money laundering program at Binance. Following his November 21 guilty plea, Zhao agreed to resign from his CEO position and to pay a $50 million fine. Concurrently, Binance has settled for $4.3 billion in fines and restitution for operating without a license and violating the International Emergency Economic Powers Act.
In light of Binance’s guilty plea, Treasury Secretary Janet Yellen had asserted the exchange’s role in facilitating transactions for illicit activities. Yellen’s statement pointed to the severity of Binance’s actions, enabling a platform for illegal transactions that supported a range of illicit activities, including child sexual abuse materials, narcotics trafficking, and financing for terrorism.
Amidst these, Binance faces additional legal challenges of its own, as the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against the crypto exchange, its U.S. operation, and founder Changpeng “CZ” Zhao in June 2023. The suit accuses them of breaching federal securities laws by offering unregistered securities, including the BNB token and the Binance-linked BUSD stablecoin, to the public. Furthermore, the SEC alleges that Binance’s staking services also contravened securities regulations, adding another layer of complexity to the legal woes confronting Zhao and the company he founded.