DOJ Requires Three Years In Prison For CZ

The US Department of Justice (DOJ) is recommending a 36-month prison sentence for Changpeng Zhao, founder of Binance, following his admission that he violated federal sanctions and anti-money laundering laws. For their part, the defendant’s lawyers are advocating a sentence of probation.

DOJ calls for 3-year prison sentence for Changpeng Zhao

In November last year, CZ pleaded guilty to breaching the Bank Secrecy Act (BSA). Under the terms of his plea agreement, he initially faced a maximum sentence of 18 months in prison. However, the DOJ‘s recent sentencing memo complicates matters, with prosecutors calling for a harsher sentence than expected.

According to the file, the absence of an effective anti-money laundering (AML) program on the platform Binance provided the opportunity for bad actors to disguise the origin of illicit funds. These were mainly derived from ransomware attacks, transactions on darknet markets and various online scams.

In view of the above, the DOJ now considers that “the scope and consequences of the misconduct of Changpeng Zhao were massive”.. Accordingly, the prosecutors requested a sentence of 36 months’ imprisonment and a $50 million fine.

Although the sentencing guidelines call for 12 to 18 months’ incarceration for this type of offense, the prosecution believes that an upward variation is justified in this case. They cite the magnitude of the misconduct and its potential impact on U.S. national security.

Defense argues for probationary sentence

On his part, Zhao maintains that he had no knowledge of specific transactions involving funds of criminal origin on the platform Binance. They also argue that the charge of sanctions violation, to which Binance pleaded guilty, is unprecedented and limited in scope, being applied for the first time in this specific case.

The defense argues that the incriminated transactions constituted only a tiny fraction of the total volume traded on Binance, making it unlikely that Zhao was intentionally involved.

CZ’s lawyers point out that no defendant in a similar case has ever been sentenced to prison. Instead, they advocate a sentence of probation, possibly accompanied by house arrest at his Abu Dhabi property.

Initially scheduled for the end of February, the sentencing hearing in this case has been postponed until April 30. It will be interesting to see whether the judge takes account of the arguments put forward by the defense, or whether he chooses to follow the DOJ’s instructions.