Changpeng Zhao, the former CEO of Binance, is facing a potential three-year prison sentence and a $50 million fine as US federal prosecutors urge a harsher punishment for his role in violating US anti-money laundering laws. This comes after Zhao, a Canadian national, resigned from his position at the world's largest cryptocurrency exchange platform as part of an agreement with US authorities.
Investigations revealed that Binance failed to prevent transactions involving extremist groups such as the Islamic State, al-Qaeda, and Hamas, leading to a guilty plea from Zhao and a $4.3 billion settlement from Binance. Despite this crime typically resulting in probation, prosecutors are seeking a harsher punishment for Zhao, citing his decision to violate US law as a "business decision" that prioritized profits over compliance.
"He made a business decision that violating US law was the best way to attract users, build his company, and line his pockets," Justice Department lawyers said of Zhao in a sentencing memorandum. "The sentence in this case will not just send a message to Zhao but also to the world."
Zhao's legal team has argued that probation is a suitable punishment, citing his admission of guilt and charitable endeavors. "I made mistakes, and I must take responsibility," Zhao said in a November post on X, formerly Twitter.
Binance was founded in 2017 and quickly dominated the crypto-trading market, making Zhao a billionaire. However, the company faced significant challenges after the crypto markets collapsed and regulators began scrutinizing its business. Despite a comeback in recent months, the industry has faced a series of scandals, including the collapse of FTX, Binance's main rival exchange, and criminal charges against several industry executives.
Binance's newly appointed CEO, Richard Teng, has stated that the company has invested hundreds of millions of dollars in compliance efforts and is closely collaborating with regulators. However, the outcome of Zhao's sentencing will send a message to the industry and the world about the consequences of violating US law.
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