Changpeng Zhao, the founder of cryptocurrency exchange giant Binance, should go to prison for three years after breaking the law “on an unprecedented scale” and pleading guilty to money laundering violations, prosecutors wrote federal officials in a court filing Wednesday.
Defense lawyers countered in their own memo that Mr. Zhao, 47, should not be sentenced to prison and probation, arguing that he had accepted responsibility for his crime and demonstrated of a philanthropic commitment.
A federal judge in Seattle, Richard A. Jones, is expected to weigh those recommendations at a sentencing hearing for Mr. Zhao on Tuesday. His conviction will be the latest milestone in a series of criminal prosecutions targeting some of the most powerful figures in the global cryptocurrency industry.
Just 18 months ago, Mr. Zhao, as chief executive of Binance, helped set in motion the chain of events that led to the collapse of FTX, Binance’s biggest rival, and the imprisonment of FTX founder Sam Bankman-Fried, who was convicted. to 25 years for fraud. Now, Mr. Zhao faces his own prison sentence after reaching a deal with prosecutors in November, admitting that he failed to set up an adequate system at Binance to prevent money laundering.
Under federal guidelines, this crime carries a sentence of 12 to 18 months, prosecutors wrote in their memo. They noted that the U.S. Probation Department had recommended five months in prison for Mr. Zhao. But the government is seeking a three-year prison sentence, the memo said, because of the “scale and consequences” of Mr. Zhao’s behavior.
As the founder of Binance, Mr. Zhao was arguably the most powerful executive in the cryptocurrency industry. At times, Binance processed up to two-thirds of all crypto transactions. Mr. Zhao has a fortune worth $33 billion, according to Forbes.
But for years he was accused of breaking the law to expand his business around the world. In November, the company agreed to pay $4.3 billion in fines and restitution to the U.S. government, settling accusations that it violated economic sanctions against Syria, Cuba and Iran while allowing criminal activities to thrive on its platform.
Separately, Mr. Zhao pleaded guilty to failing to maintain an adequate anti-money laundering program at Binance. As part of the deal, he agreed to pay a $50 million fine and resign as chief executive of Binance. He was replaced by Richard Teng, a former Singapore regulator who had been groomed to succeed him.
In court documents, Mr. Zhao admitted to prioritizing Binance’s growth over its compliance with the Bank Secrecy Act, which requires companies to avoid doing business with criminals or people facing criminal charges. economic sanctions. He told Binance employees that it was “better to ask for forgiveness than for permission,” according to court documents, and allowed Binance customers to create accounts without sharing the kind of detailed personal information that Binance companies financial services usually need.
“Zhao’s sentence should reflect the seriousness of his crimes,” prosecutors wrote in their filing Wednesday. “Zhao and Binance put U.S. customers, the U.S. financial system, and U.S. national security at risk.”
In their brief, Mr. Zhao’s lawyers argued that he deserved leniency, pointing out that he had come to the United States from his home in the United Arab Emirates to plead guilty. They wrote that while Mr. Zhao admitted to a compliance lapse at Binance, he did not plead guilty to money laundering, fraud or theft.
“Mr. Zhao is not a symbol. He is a devoted father, a philanthropist,” the defense memo states. “He has already shown remorse for his offense and, more importantly, has made remediation.”
The memo included letters from Mr. Zhao’s friends and Binance employees, some of whom wrote that the company was working hard to cooperate with law enforcement around the world. Defense lawyers called Mr. Zhao “frugal and humble,” saying he intended to give away 90 to 99 percent of his wealth.
Among the letter’s authors were Mr. Zhao’s two adult children, both students at U.S. universities, and Max Baucus, a former U.S. senator and ambassador to China. In his letter, Mr. Baucus, who worked as an advisor to Binance, described Mr. Zhao as a “near-genius” and “one of the most honest people I have known.”
“My impression was that Binance grew exponentially and became somewhat top-heavy,” he wrote. “He now clearly understands that he should have been much more diligent.”
Since his guilty plea, Mr. Zhao has remained in the United States, after Judge Jones rejected his request to return home to his family in Dubai before his sentencing. Prosecutors said in the memo that he traveled freely across the country, including to Telluride, Colorado, and Los Angeles.
News Source : www.nytimes.com
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