The U.S. Department of Justice (DOJ) has submitted its sentencing memorandum in the lawsuit against Changpeng “CZ” Zhao, the founder and former CEO of Binance.
According to the latest filing, the DOJ is recommending that Judge Richard A. Jones sentence CZ to three years in prison and impose a $50 million fine for his violation of U.S. money laundering regulations.
Prosecutors have also argued that Zhao played a significant role in enabling Binance to violate federal sanctions. However, CZ’s attorneys filed a response shortly after, stating that the former executive does not deserve to be sentenced to prison but should instead receive probation.
The DOJ is seeking a longer prison term for the Binance founder. In November 2023, Binance pleaded guilty to violating U.S. money laundering laws and agreed to pay $4.3 billion as part of a settlement. CZ also pleaded guilty to money laundering-related charges brought by the DOJ.
Initially, CZ faced a maximum sentence of 18 months in prison and a $50 million fine. He resigned as CEO of Binance. However, the DOJ is now requesting an extended prison sentence of 36 months (three years), arguing that CZ not only had knowledge of the money laundering violations but also encouraged them.
Prosecutors claim that CZ benefited greatly from Binance’s violation of U.S. laws and recommend that he face significant consequences for it. By imposing a three-year prison sentence and a $50 million fine, the DOJ believes that the court will send a strong message to CZ and potential violators worldwide.
The DOJ emphasized that CZ’s failure to implement effective anti-money laundering protocols at Binance allowed illicit transactions to take place on the largest cryptocurrency exchange by 24-hour trading volume.
In defense, CZ’s lawyers argued that their client had no knowledge of any criminal transactions on the platform. They explained that although Binance’s compliance officer informed CZ about users from U.S.-sanctioned countries, the exchange was never prohibited from onboarding users from those nations as it is a non-U.S. exchange.
Furthermore, CZ’s attorneys stressed that the charges against Binance were a result of the platform’s automatic pairing of users from U.S.-sanctioned countries with U.S.-based clients. They pointed out that these transactions only represented a small fraction of Binance’s total volume. As a result, CZ’s lawyers urged Judge Jones not to sentence their client to three years in prison but instead to probation, specifically confinement in his Abu Dhabi home.
In the meantime, CZ has received support from over 160 individuals, including his family and friends, who have sent letters to the judge seeking leniency.
The sentencing of the former Binance CEO, which was initially scheduled for February 2024, has been postponed to April 30 following an agreement.
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