U.S. prosecutors are pushing for a tougher sentence of 36 months for the former CEO of cryptocurrency exchange Binance. This stems from charges of enabling money laundering, as highlighted in a sentencing memorandum recently released. The prosecutors argue that such a sentence is necessary to reflect the gravity of the crimes committed by Zhao.
Zhao is accused of deliberately failing to establish an effective anti-money laundering program, violating the Bank Secrecy Act’s requirements. Additionally, he is accused of allowing Binance to engage in transactions involving proceeds of unlawful activities. This includes transactions between U.S. citizens and individuals in sanctions jurisdictions.
The U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission have both filed lawsuits against Binance for mishandling customer assets and running an unregistered exchange in the U.S. In response, the U.S. ordered Binance to pay $4.3 billion in fines and forfeitures, with Zhao agreeing to a $50 million fine.
CEO Resignation and Replacement
Following these legal issues, Zhao stepped down as Binance’s CEO in November and was replaced by Richard Teng, the former chief of Abu Dhabi markets regulator. This change in leadership came after reaching a plea deal related to the charges against Zhao. Despite these developments, Zhao was not immediately available for comment.
Prosecutors assert that Zhao’s violations of U.S. law were unprecedented and displayed a deliberate disregard for the legal responsibilities of Binance. The sentencing memorandum characterizes Binance’s operation under Zhao as a “Wild West” model, signaling a lack of oversight and compliance. Prosecutors emphasize that Zhao must now face the consequences of his actions.
The official sentencing for Zhao is expected to occur on April 30. With U.S. prosecutors advocating for a sentence double the high end of advisory guidelines, the outcome of the sentencing will play a crucial role in determining the accountability and repercussions for Zhao’s involvement in money laundering activities.
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