Binance founder Changpeng "CZ" Zhao to go to prison for 36 months

The founder of Binance, Changpeng Zhao (CZ), is to spend 36 months in prison and pay a fine of 50 million US dollars - if the US Attorney's Office has its way. This demand was announced by the prosecution last night in Seattle. CZ and Binance had already pleaded guilty to money laundering, among other things, at the end of last year.

Given the magnitude of Zhao's willful violation of U.S. law and its consequences, a sentence of 36 months above the guidelines is warranted. This sentence, together with the agreed fine of $50 million, is sufficient but no greater than necessary [...].
_{From the sentencing memorandum of the U.S. Attorney's Office}

Hours later, CZ's defense submitted their own sentencing memo, in which they point out that no defendant in a similar case had ever been sentenced to prison. They refer to the sentence for the then CEO of crypto exchange BitMEX, Arthur Hayes, who was also sentenced for violations of the Bank Secrecy Act (BSA) - but only to six months of house arrest and two years of probation. Accordingly, CZ's defense proposed a suspended sentence, which could also include house arrest at his Abu Dhabi estate.

For a prison sentence up to the actual maximum of 18 months, the defense already signaled that it would waive CZ's right to appeal. In addition, the parties have already agreed on the fine of 50 million US dollars. The native of China is scheduled to be sentenced on April 30 in Seattle, Washington. CZ is currently at large in the USA on bail of 175 million US dollars.

The internationally active crypto exchange, on which most of the volume is traded, has been under the scrutiny of US authorities for some time. For example, the US Securities and Exchange Commission (SEC) also sued the company with an unknown registered office for selling unregistered securities and violating investor protection laws.

However, this case, which should put CZ behind bars, is about the crypto exchange's willful violations of US laws on money laundering and sanctions. Among other things, Binance allegedly failed to report more than 100,000 suspicious transactions related to terrorist groups - including Hamas, Al-Qaeda and the Islamic State. According to the US Attorney's Office, the platform also allegedly facilitated the sale of child sexual abuse material and ransom payments as part of ransomware.

In November last year, CZ resigned as CEO of the largest crypto exchange. He and Binance pleaded guilty to violating US money laundering laws. Binance agreed to pay a fine of 1.8 billion and damages of 2.5 billion US dollars.

On Tuesday next week, it should be clear exactly what sentence CZ will face in the USA. If he is sent to prison, Zhao would be the next founder of a global crypto exchange to be behind bars alongside Sam Bankman-Fried.