Changpeng Zhao, founder of giant cryptocurrency exchange Binance, should be jailed for three years after pleading guilty to law breaking and money-laundering violations on an “unprecedented scale,” federal prosecutors wrote in a court filing Wednesday.
Defense lawyers countered in their own memorandum that Mr. Zhao, 47, should not receive a prison sentence and should face a sentence of probation, arguing that he has accepted responsibility for his crime and has shown altruism. Has shown commitment towards.
A federal judge in Seattle, Richard A. Jones, is set to evaluate those dueling recommendations at Mr. Zhao's sentencing hearing on Tuesday. His sentencing would be the latest milestone in a series of criminal prosecutions that have targeted some of the most powerful figures in the global cryptocurrency industry.
Just 18 months ago, Mr. Zhao, who held the position of chief executive of Binance, helped set off the chain of events that led to the collapse of Binance’s biggest rival FTX and the imprisonment of FTX founder Sam Bankman-Fried. Those who were sentenced were sentenced. Punishment up to 25 years for fraud. Mr Zhao now faces his prison term after striking a deal with prosecutors in November in which he admitted he failed to set up adequate systems at Binance to prevent money laundering.
Under federal guidelines, that offense carries a sentence of 12 to 18 months, prosecutors wrote in their memo. He noted that the US Probation Department had recommended five months in prison for Mr Zhao. But the government is seeking a three-year sentence, because of the “scope and impact” of Mr. Zhao’s behavior, the memorandum said.
As the founder of Binance, Mr. Zhao was once arguably the most powerful executive in the cryptocurrency industry. At times, Binance processes up to two-thirds of all crypto transactions. Mr. Zhao has $33 billion worth of assetsAccording to Forbes.
But for years they were accused of breaking the law to expand their business around the world. In November, the company agreed to pay a $4.3 billion fine and restitution to the US government, settling charges that it circumvented economic sanctions against Syria, Cuba and Iran while allowing criminal activity to flourish on its platform. Had violated.
Separately, Mr. Zhao pleaded guilty to failing to maintain an adequate anti-money laundering program at Binance. As part of the deal, he agreed to pay a $50 million fine and step down as chief executive of Binance. He was replaced by Richard Teng, a former Singapore regulator who was groomed to replace him.
In court papers, Mr Zhao admitted to prioritizing Binance's growth over compliance with the Bank Secrecy Act, which requires companies to avoid doing business with criminals or people who face economic sanctions. Court papers say he told Binance employees it was “better to apologize than allow”, and allowed Binance customers to create accounts without sharing the kind of detailed personal information that financial services firms are typically required to do. Is required.
“Zhao's sentence should reflect the seriousness of his crimes,” prosecutors wrote in a filing Wednesday. “Zhao and Binance endangered US consumers, the US financial system, and US national security.”
In their memorandum, Mr. Zhao's lawyers argued that he deserves leniency, emphasizing that he came to the United States from his home in the United Arab Emirates to plead guilty. They wrote that although Mr. Zhao had admitted compliance failures at Binance, he had not pleaded guilty to engaging in money laundering, fraud or theft.
“Mr. Zhao is not an icon. He is a devoted father, a philanthropic man,” the defense memo said. “He has already shown remorse for his crime and, more importantly, has made amends.” Have done.”
The memo included letters from Mr. Zhao’s friends and Binance employees, some of whom wrote that the company was working hard to cooperate with law enforcement organizations around the world. Defense lawyers described Mr. Zhao as “frugal and modest” and said he intended to donate 90 to 99 percent of his wealth.
Among the letter writers were Mr Zhao's two adult children, both students at American universities, and Max Baucus, a former US senator and ambassador to China. In his letter, Mr. Baucus, who worked as an adviser to Binance, described Mr. Zhao as “almost a genius” and “one of the most decent people I know.”
“My impression was that Binance grew too fast and became somewhat unwieldy,” he wrote. “He now clearly understands that he should have worked harder.”
Since his guilty plea, Mr Zhao has remained in the United States, after Judge Jones rejected his request to return home to his family in Dubai before sentencing. Prosecutors said in the memo that he was in Telluride, Colo. and had traveled freely throughout the country, including Los Angeles.