US Department of Justice Seeks 3-Year Sentence for CZ, Arguing that an Increased Term Reflects the Seriousness of the Crime
The US Department of Justice (DOJ) released a memorandum on Tuesday evening, stating that Changpeng Zhao (CZ), the founder and former CEO of Binance and Binance.US, violated federal sanctions and anti-money laundering provisions of the Bank Secrecy Act. Prosecutors are seeking a 36-month sentence.
According to the memorandum, although CZ’s maximum sentence under the November 2023 plea agreement is only 18 months, considering the operations of the exchange in the US and the scale and impact of Binance in the country, it is believed that 18 months “is not sufficient to adequately punish the damage to US national security caused by CZ’s actions, and the misconduct on this scale.” Therefore, an increased term that is twice as long is seen as the “appropriate option that reflects the severity of the crime.”
The document also reiterated the arguments made by the DOJ when Binance and CZ were first indicted last year, stating that CZ failed to implement an effective anti-money laundering (AML) program at Binance, allowing illicit activities to take place on the exchange, including providing mixing services to hide the source and ownership of cryptocurrencies, receiving illegal proceeds from various software-based extortion schemes, and transferring funds from dark web transactions.
Prosecutors state that CZ’s responsibility lies in making business decisions that violate US law, adopting a “Wild West” model and deliberately ignoring transactions between US users and individuals in sanctioned regions, believing that this is the best way to attract users and expand the company’s business.
The US prosecution stated, “This case’s sentence is not only a message to CZ but also a warning to the world. CZ obtained enormous wealth by violating US law, but the corresponding cost for this violation must be substantial in order to effectively punish CZ’s criminal behavior and deter others who have similar intentions of building their own business empires by violating US law.”
Defense lawyers actively seek probation, claiming that the charges are narrow and unprecedented.
CZ’s defense team strongly refuted the sentencing recommendation put forth by the US DOJ, arguing that CZ did not facilitate illegal fund transactions within Binance, and the suspicious transactions amounted to an insignificant portion of Binance’s overall trading volume, making it difficult to prove CZ’s intentional involvement.
Furthermore, the defense lawyers pointed out that CZ did not evade his responsibility. In November 2023, CZ pleaded guilty to money laundering and sanctions violations in the US, agreeing to pay a $50 million fine, waive his right to appeal the 18-month sentence, and resign from his CEO position.
In addition, Binance agreed to pay $4.32 billion, including $1.81 billion in criminal fines and $2.51 billion in restitution, making it one of the largest corporate fines in history. CZ also actively rectified past negligence and further strengthened Binance’s compliance applications and measures.
CZ’s defense team also stated that no defendant has ever been sentenced to imprisonment in similar cases related to money laundering under the Bank Secrecy Act. Combined with CZ’s attitude and the low likelihood of reoffending, they are seeking probation, with possible options including house arrest in CZ’s Abu Dhabi residence.
The defense documents mentioned, “As a non-US company, it is not illegal for Binance to have users from US-sanctioned countries on its platform. The charges against the company and CZ are unprecedented and narrow.”
To apologize for his past decisions, CZ mentioned in his letter submitted to the judge handling the case on Tuesday, “I have no excuses for failing to establish the necessary compliance measures at Binance, and I assure you that this is the only time I will have any interaction with the criminal justice system.”
In addition to personal letters, CZ’s friends and family submitted a total of 161 letters to the court in support of CZ, including Binance’s co-founder and CZ’s current partner, He Yi, CZ’s wife, Yang Weiqing, CZ’s mother, children, and colleagues, hoping for leniency from the judge.
Currently, CZ remains free on $175 million bail, but his request to return to Dubai was denied by the judge. The sentencing hearing is scheduled for April 30.
Source:
Coindesk, Coindesk, CNBC
