The DOJ proposes that Changpeng “CZ” Zhao, Binance‘s founder and ex-CEO, serve a three-year prison term.
After confessing to breaking the Bank Secrecy Act in November the previous year, this suggestion arises from Zhao’s admission of guilt.
CZ’s Sentencing
Based on documents submitted by Justice Department lawyers on Tuesday evening, the sentence for Zhao includes serving a prison term of 36 months and paying a fine of $50 million.
The filing argued that “sending a strong message to Zhao and the world is crucial for this case’s sentence,” highlighting the importance of imposing a stern punishment to discourage comparable misconduct in the future.
The document submitted by the DOJ details their evaluation of the sentencing guidelines, noting that these usually suggest a term of 12 to 18 months. Yet, it brings attention to Zhao’s knowledge of Binance’s lawbreaking activities and his active participation in endorsing them.
The criticism additionally questions the effectiveness of the Sentencing Guidelines in dealing with Bank Secrecy Act violations. It argues that these guidelines do not impose sufficient penalties for such serious misconduct or the potential harm it poses to U.S. security.
With his plea deal originally carrying a maximum penalty of 18 months in prison, Zhao now grapples with the daunting prospect of a longer jail term.
Previously, CZ agreed to pay a $50 million penalty and gave up his option to challenge any sentence within 18 months.
DOJ’s Argument
The document underscores the gravity of Zhao’s actions, bringing attention to his role as head of a large crypto trading firm that handled an enormous volume of transactions totaling over a trillion dollars yearly, in blatant disregard of American laws.
According to the DOJ’s argument, Zhao’s intentional disregard for legal duties allowed Binance to process vast sums of money derived from illegal activities, such as darknet markets and crypto mixers.
Additionally, the text mentions that due to the extensive nature of Zhao’s wrongdoing, there should be an increase in the penalty, taking into account Binance’s significant volume of crypto transactions and substantial earnings from American clients and operations.
At the heart of the DOJ’s case against Zhao is the allegation that he neglected to establish an adequate anti-money laundering (AML) system at Binance. Consequently, the exchange reportedly served as a base for illicit activities, such as transactions linked to ransomware attacks, profits from darknet markets, and various types of frauds.
The planned sentencing, originally slated for late February, was instead rescheduled to April 30 through consensus between involved parties.
Simultaneously, Binance deals with the consequences of this development. In addition to Zhao’s plea, Binance reached an agreement to pay a $4.3 billion penalty and secure a court-appointed overseer. Nonetheless, the appointment process remains ongoing.
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2024-04-24 13:32