In a recent court filing, U.S. prosecutors have proposed a hefty 36-month prison term for Changpeng Zhao, widely known as CZ, the founder of Binance. This move follows guilty pleas from both Binance and CZ himself regarding charges of violating anti-money laundering laws.
Caught Unaware?
CZ’s defense strongly claims that he was unaware of the illegal transactions on his platform. They argue that such transactions represented only a tiny fraction of the exchange’s total trading volume, describing the likelihood of CZ’s deliberate involvement as ‘inconceivable.’
Advocates for CZ advocate for probation rather than incarceration, citing his lack of prior awareness and the isolated nature of these incidents.
They point out that although Binance’s chief compliance officer had alerted CZ to the presence of users from U.S.-sanctioned countries, Binance, as a non-U.S. entity, was not legally barred from serving these users.
Read More About This: DOJ Pushes for Harsh 3-Year Prison Sentence for Binance Founder “CZ”
Legal Consequences and Global Impact
The charges leveled against Binance represent a groundbreaking legal interpretation: their automated systems inadvertently facilitated transactions between users in sanctioned countries and the U.S., a legal scenario previously untested in the realm of Binance’s operations.
In their plea deal, CZ and Binance have agreed to substantial consequences extending far beyond the courtroom. Alongside facing criminal charges, Binance has consented to a staggering $4.3 billion fine and must now operate under the oversight of a court-appointed monitor.
Regulatory Fallout
The ongoing legal proceedings have had personal repercussions for CZ. Originally scheduled for sentencing in late February, the hearing has been pushed to April 30. Since his court appearance in Seattle, CZ has been unable to return to Dubai, where his family resides.
In addition to his personal predicament, Binance finds itself under regulatory scrutiny elsewhere. The Philippines Securities and Exchange Commission has recently moved to curtail the exchange’s activities within its jurisdiction. Moreover, on April 23, the SEC announced a collaboration with tech giants Google and Apple to remove Binance’s apps from their stores, citing concerns for the protection of local investors.
