DOJ Calls for 3-Year Prison Sentence for Binance Ex-Founder Changpeng Zhao

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According to a Reuters report, the U.S. Department of Justice (DOJ) has recommended a three-year prison sentence for Changpeng “CZ” Zhao, the founder and former chief executive of Binance, for his involvement in allowing the cryptocurrency exchange to violate federal sanctions and money laundering laws. This recommendation follows Zhao’s guilty plea last year for violating the Bank Secrecy Act.

DOJ’s Stern Stance on CZ

In a sentencing memo filed by DOJ attorneys, they argued that Zhao should serve 36 months in prison and pay a $50 million fine. The memo emphasized that the severity of the sentence is crucial not only to hold Zhao accountable but also to send a clear message to others tempted to flout U.S. laws for financial gain. The DOJ stressed the need for significant consequences to deter individuals from building fortunes through illegal means.

While Zhao initially faced up to 18 months in prison under his plea agreement, the DOJ argued for an upward variance due to his misconduct’s extensive nature and impact. The agreed-upon $50 million fine is intended to underscore the violations’ seriousness further.

Zhao’s sentencing, originally scheduled for late February, was postponed to April 30 by mutual agreement. However, he has been unable to return to Dubai, where his partner and children reside, since his appearance in federal court in Seattle, Washington, last year.

Binance’s Parallel Legal Battle

Meanwhile, Binance has also pleaded guilty to related charges simultaneously as Zhao. The exchange agreed to a substantial fine and will report to a court-appointed monitor, although the appointment has yet to occur.

In a separate development, the Securities and Exchange Commission in the Philippines has called for removing the Binance app from Google and Apple stores, citing the sale of unregistered securities and operating without a broker’s license. With such stern actions from regulators globally, Binance’s share of Bitcoin trading outside the United States has reportedly fallen from 81.3% to 55.3% over the past year due to increased competition and tighter global regulations.