The United States Department of Justice (DOJ) has recommended a 36-month prison sentence for Changpeng “CZ” Zhao, the founder and former CEO of Binance, the world’s largest cryptocurrency exchange. This comes after Zhao pleaded guilty to violating the Bank Secrecy Act (BSA) last November. The DOJ’s sentencing memo argues that Zhao’s actions enabled Binance to violate federal sanctions and money laundering laws, resulting in massive illicit transactions.
The DOJ’s recommendation exceeds the 12-18 months outlined in the plea agreement, citing the scope and ramifications of Zhao’s misconduct as justification for an upward variance. The filing highlights how Binance’s lack of effective anti-money laundering (AML) programs allowed illicit actors to use the exchange for various criminal activities, including ransomware attacks, darknet market transactions, and internet-related scams.
In contrast, Zhao’s defense team argues that he should serve no jail time, citing the $50 million fine he has agreed to pay and his “extraordinary acceptance of responsibility.” They suggest probation, including home confinement, as an alternative sentence. The defense filing emphasizes that Zhao was not explicitly informed of specific transactions involving criminal funds and that Binance, as a non-US company, was not prohibited from having users from US-sanctioned countries on its platform.
The sentencing guidelines calculations recommend 12-18 months, but the DOJ argues that Zhao knew Binance was violating the law and encouraged it. The DOJ also criticizes the Sentencing Guidelines for not adequately addressing BSA violations, particularly those that harm US national security.
Zhao’s supporters, including his family members, former US Senator Max Baucus, and several individuals, have submitted letters of support ahead of his sentencing. The defense filing also references these letters, which are largely redacted in the public filing.
The sentencing hearing is scheduled for April 30, and Zhao remains unable to return to Dubai, where his partner and some of his children reside, since his initial court appearance in Seattle, Washington, last year. Binance, which pleaded guilty to charges alongside Zhao, agreed to a $4.3 billion fine and will be subject to a court-appointed monitor, who has yet to be appointed.
