Key Insights
- U.S. prosecutors seeking 36-month above-guidance prison sentence for ex-Binance CEO Changpeng Zhao
- Zhao accused of enabling unprecedented money laundering, willfully failing anti-money laundering compliance
- Tough sentence aims to punish Zhao’s “Wild West” leadership, deter other crypto platforms from similar lapses
NEW YORK (MarketsXplora) – U.S. prosecutors are seeking an above-guidance prison sentence of 36 months for Changpeng Zhao, the former chief executive of cryptocurrency exchange Binance, for enabling money laundering and willfully failing to implement an effective anti-money laundering program, according to a sentencing memorandum filed late Tuesday.
The government’s request that Zhao serve double the high end of the 12-18 month sentencing range recommended by advisory guidelines “reflects the gravity of his crimes,” prosecutors said in the filing with the U.S. District Court for the Western District of Washington.
Zhao, 47, stepped down as Binance CEO in November after pleading guilty and agreeing to pay a $50 million personal fine as part of the exchange’s $4.3 billion settlement with U.S. authorities over violations of the Bank Secrecy Act and sanctions on Iran.
Prosecutors accused Zhao of operating Binance as a “Wild West” cryptocurrency exchange with a “deliberate disregard” for its anti-money laundering obligations under U.S. law.
“Zhao bet that he would not get caught, and that if he did, the consequences would not be as serious as the crime,” they wrote. “But Zhao was caught, and now the Court will decide what price Zhao should pay for his crimes.”
Binance processed over $10 billion in illegal payments involving criminals, hackers and sanctioned parties under Zhao’s leadership, enabling “the unprecedented scale of money laundering and financial crime” on the platform, prosecutors said.
In addition to the charges against Zhao and Binance, the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission have filed civil lawsuits accusing the exchange of mishandling customer funds and operating illegally in the United States.
Zhao could not be reached for comment. His official sentencing hearing is scheduled for April 30.
Related! Ex-Binance Boss Zhao Gets 4-Month Prison Term in Money Laundering Case
Defense lawyers are expected to argue for a more lenient sentence within the guidelines range, citing Zhao’s acceptance of responsibility and the $4.3 billion in penalties already levied against Binance.
The recommended sentence and Zhao’s removal as CEO aims to deter other crypto platforms from similar lapses, prosecutors said. However, some legal experts question whether jailing individuals will make crypto more compliant with anti-money laundering rules designed around traditional finance.
“It sends a signal that crypto is being cracked down on, but it is still an open question whether enforcing these kinds of banking regulations is going to work for this industry,” said Mike Calhoun, a financial crimes expert at advisory firm Datacity.