Binance founder Changpeng Zhao faces sentencing; US seeks 3-year term for allowing money laundering
SEATTLE — Changpeng Zhao, the founder of Binance, the world’s largest cryptocurrency exchange, will be sentenced Tuesday in a Seattle courtroom, where U.S. prosecutors are asking a judge to give him a three-year prison sentence for allowing rampant money laundering of money on the platform.
Zhao pleaded guilty and resigned as CEO of Binance in November after the company agreed to pay $4.3 billion to settle related allegations. U.S. officials said Zhao deliberately looked the other way as illegal actors conducted transactions that supported child sex abuse, the illegal drug trade and terrorism.
βHe made a business decision that violating U.S. law was the best way to attract users, build his business and line his pockets,β the Justice Department wrote in a sentencing memorandum last week.
Zhao’s lawyers are pushing for no jail time at all, citing his willingness to come to the U.S. from the United Arab Emirates, where he and his family live, to plead guilty despite the lack of an extradition treaty with the US. One of them was once sentenced to prison for similar violations of the Bank Secrecy Act, they said.
βI want to take responsibility and close this chapter in my life,β Zhao said as he entered his guilty plea to one charge of failing to prevent money laundering. βI want to come back. Otherwise I wouldn’t be here today.β
But prosecutors say no one has ever violated the Bank Secrecy Act to the extent that Zhao did. The three-year prison sentence they are seeking is twice as high as the guideline for this crime. Binance allowed more than 1.5 million virtual currency transactions β totaling nearly $900 million β in violation of US sanctions, including sanctions involving Hamas’ al-Qassam Brigades, al Qaeda and Iran.
Zhao knew Binance was required to implement anti-money laundering protocols, but instead ordered the company to hide customer locations in the U.S. in an effort to avoid compliance with U.S. law, prosecutors said.
The cryptocurrency industry has been marred by scandals and market collapses. Most recently, Nigeria attempted to try Binance and two of its executives on charges of money laundering and tax evasion.
Zhao was perhaps best known as the main rival of Sam Bankman-Fried, the founder of the FTX, the second-largest crypto exchange before it collapsed in 2022. Bankman-Fried was convicted of fraud last November for stealing at least $10 billion. from customers and investors and sentenced to 25 years in prison.
Zhao and Bankman-Fried were originally friendly competitors in the sector, with Binance investing in FTX when Bankman-Fried launched the exchange in 2019. However, the relationship between the two deteriorated, culminating in Zhao’s announcement that he was investing all his cryptocurrency investments in FTX in early November 2022. A week later, FTX filed for bankruptcy.