U.S. DOJ Seeks Three-Year Sentence for Binance Founder Zhao

Binance's founder and former CEO, Changpeng "CZ" Zhao, should spend three years in prison for his part in helping the massive crypto exchange evade federal sanctions and money laundering laws, the US Department of Justice said Tuesday night.

Last month, DOJ attorneys filed a sentencing memo arguing he should spend 36 months in prison and pay a $50 million fine after he pleaded guilty to violating the Bank Secrecy Act in November. "The sentence in this case will not only send a message to Zhao but to the world. Zhao reaped a vast profit from his violations of U.S. law, and the cost of that violation must be high to effectively punish Zhao for his criminal acts and send a message to others," wrote prosecutors in the filing.

Zhao faced up to 18 months in jail according to the terms of his plea agreement. "The scope and ramifications of Zhao's misconduct were massive," the DOJ argued in its filing on Tuesday.

"This was, in part, because Zhao had failed to implement an effective Binance AML program at Binance, allowing for the proceeds of crimes, including through operation of mixing services that hid the source and ownership of the cryptocurrency, transacting in illicit proceeds from ransomware attacks, and moving proceeds of darknet market transactions, hacks by exchanges, or other internet-related scams," the filing said.

Much of the filing rehashes arguments made by the DOJ when it first announced charges against Binance and Zhao last year, pointing to how the exchange did business within the U.S.

The filing also walks through the DOJ's sentencing guidelines calculations, which suggest 12-18 months of sentencing. This was underscored by quoting Zhao as knowing that Binance was breaking the law and encouraging it.

The filing also took a shot at how the Sentencing Guidelines address Bank Secrecy Act violations, saying that they "are not designed to adequately punish either misconduct on this scale or misconduct that harms U.S. national security." Prosecution and Zhao defense had agreed to a $50 million fine, nevertheless. Zhao also waived his right of appeal to any sentence stretching up to 18 months.

He was originally set to be sentenced in late February, but the hearing was postponed by mutual agreement to April 30. Since he first appeared in federal court in Seattle, Washington, last year, he has not been able to return to Dubai, where he has a partner and some of his children live.

At the same time, the biggest crypto exchange in the world, Binance, has pleaded guilty to some of its charges and agreed to pay a mammoth fine of $4.3 billion, as well as reporting to a monitor who will be appointed by the court. The court has yet to appoint the said monitor.