Prosecutors Seek 3-Year Prison Term for Binance Founder; Zhao Pens Apology Letter
by Fintech News Singapore April 25, 2024U.S. prosecutors have proposed a three-year prison sentence for Changpeng Zhao, the founder and former CEO of crypto exchange Binance, following his guilty plea for violating anti-money laundering laws, according to Reuters.
The recommendation, filed in a Seattle federal court, suggests a sentence double the duration advised by federal guidelines, reflecting the severity of Zhao’s deliberate legal breaches.
Zhao who resigned from his position at the helm of the world’s largest cryptocurrency exchange last November, and Binance admitted to bypassing requirements stipulated by the Bank Secrecy Act. This plea was part of an agreement that included a hefty US$4.32 billion criminal penalty against Binance.
The prosecution’s documents describe Binance’s operations as adopting a “Wild West” approach, deliberately attracting illicit activities by failing to report over 100,000 suspicious transactions linked to designated terrorist groups such as Hamas, al Qaeda, and ISIS.
Further allegations include the platform’s involvement in distributing child sexual abuse materials and receiving significant ransomware payments.
Prosecutors criticised Zhao’s decision to violate U.S. laws as a strategy to expand his business and personal wealth.
In contrast, Zhao’s defense highlighted his acknowledgment of wrongdoing, his status as a first-time offender, and his substantial US$50 million personal fine in their plea for leniency.
They also noted Zhao’s efforts to position Binance as a leader in industry compliance subsequent to its initial regulatory failures.
Zhao, who launched Binance in 2017, remains on a US$175 million bond and has agreed not to appeal any sentence falling within federal guidelines.
The total financial penalties for Binance included a US$1.81 billion criminal fine and US$2.51 billion in restitution. Additionally, Zhao paid US$50 million to the U.S. Commodity Futures Trading Commission. His sentencing by U.S. District Judge Richard Jones is scheduled for 30 April.
Changpeng Zhao (CZ)
In a letter addressed to the judge presiding over his case, Zhao expressed remorse for his actions, stating,
“I apologise for my poor decisions and accept full responsibility. Looking back, I realise I should have prioritised compliance at Binance right from the start, which I failed to do.”
He acknowledged the lack of initial compliance controls at Binance, a decision he now regrets.
Zhao outlined the corrective measures taken under his leadership, noting,
“Binance has since implemented stringent anti-money laundering controls, making it a leader among non-U.S. exchanges since 2022.” He described the early chaotic days of Binance’s rapid growth and his efforts to stabilise the company while ensuring the safety of users and their funds.
Looking to the future, Zhao expressed a desire to shift his focus to new ventures.
“I am now interested in opportunities within biotech, aiming to support research that could lead to definitive cures and enhance medical access using blockchain technology.”
He also mentioned his ongoing commitment to philanthropic efforts, particularly in supporting youth education and welfare across various regions.
Featured image credit: Edited from Freepik
