Changpeng Zhao, founder and CEO of Binance, attended the Viva Technology conference dedicated to innovation and new ventures held at the Porte de Versailles Exhibition Center in Paris on June 16, 2022.
Benoit Tessier | Reuters
U.S. prosecutors are seeking a sentence of more than 36 months in prison for the former CEO of cryptocurrency exchange Binance on money laundering charges, according to a sentencing memorandum released late Tuesday.
The memo, filed in court in the Western District of Washington, said Zhao should receive a higher sentence recommended under advisory guidelines that “reflects the seriousness of his crimes.”
Zhao’s sentence was 12 to 18 months in prison, according to advisory guidelines.
“A prison term of 36 months – twice the upper end of the guideline range – will reflect the seriousness of the offence, promote respect for the law, provide an adequate deterrent and be sufficient but no greater than necessary to achieve the sentencing objectives,” U.S. prosecutors said.
Zhao is accused of knowingly failing to implement an effective anti-money laundering program as required by the Bank Secrecy Act and actually allowing Binance to process transactions involving the proceeds of illegal activity, including transactions between U.S. persons and individuals in sanctioned jurisdictions.
Binance has been sued by the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission for allegedly mishandling customer assets and operating an illegal, unregistered exchange in the United States.
The United States separately accused Binance and Zhao of violating the U.S. Bank Secrecy Act and sanctions on Iran, and ordered Binance to pay $4.3 billion in fines and confiscations. Zhao agreed to pay a $50 million fine.
Following this request, Zhao resigned as Binance CEO in November and was replaced by Richard Teng, the former head of the market regulator in Abu Dhabi.
There was no immediate comment when contacted by Zhao via social media platform X.
Financial crime ‘unprecedented’
Prosecutors said Zhao’s violations of U.S. law were “unprecedented” in scale and showed “willful disregard” for Binance’s legal responsibilities.
In Tuesday’s memo, prosecutors said that under Zhao’s control, Binance operated in a “Wild West” mode.
“Chao was betting that he would not be caught and that if he were caught, the consequences would not be as severe as the crime,” the memo said.
“But Zhao was caught, and now the court will decide what price Zhao should pay for his crimes.”
Zhao’s formal sentencing is expected to take place on April 30.
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