Binance founder faces 36-month prison term for violating US laws
In a startling development, US prosecutors are pushing for a 36-month prison term for Changpeng Zhao, the founder of cryptocurrency exchange Binance, according to a court filing on Tuesday. Zhao, who stepped down as CEO but retains majority ownership of the company, is due for sentencing on April 30 in Seattle after pleading guilty in November to violating US anti-money laundering regulations.
As part of his plea deal, Zhao agreed to pay a $50 million fine, while Binance offered to pay $4.3 billion in fines and compensation. However, prosecutors are now seeking a harsher punishment than the 18 months initially recommended by federal sentencing guidelines, arguing that the severity of Zhao’s willful breach of US law and its ramifications warrant an above-Guidelines sentence.
Zhao reaped vast rewards for his violation of US law, […] and the price of that violation must be significant to effectively punish Zhao for his criminal acts and to deter others who are tempted to build fortunes and business empires by breaking US law.
Alleged negligence and operational shortcomings
Prosecutors allege that Zhao failed to implement a robust anti-money laundering (AML) program at Binance, enabling illicit actors to exploit the exchange for activities such as operating mixing services to conceal the origins of cryptocurrency. Additionally, Binance allegedly facilitated transactions between Iranian and US customers, undermining US sanctions against Iran and potentially jeopardizing the exchange’s liquidity.
In February, a settlement addressed significant operational deficiencies within Binance, including the platform’s failure to report over 100,000 suspicious transactions linked to designated terrorist organizations like Hamas, al Qaeda, and ISIS. The exchange also faced allegations of facilitating transactions related to child sexual abuse materials and proceeds from ransomware activities.
Despite the legal challenges, Zhao’s personal fortune has grown by nearly $10 billion over the past year, according to the Bloomberg Billionaires Index, with his current wealth exceeding $42 billion and ranking him as the 29th wealthiest individual worldwide.
The outcome of Zhao’s sentencing hearing on April 30 will undoubtedly have significant implications for both the cryptocurrency industry and the broader financial landscape, as regulators and law enforcement agencies continue to grapple with the challenges posed by the rapidly evolving digital asset space.
Zhao is not the only Binance official currently in trouble. After Binance halted its services in Nigeria at the beginning of March two company representatives were arrested in the country, which was followed by the firm issuing a statement requesting their release.
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