Binance founder responds to Department of Justice seeking 36-month prison sentence

The U.S. Department of Justice (DOJ) has submitted a sentencing memorandum to Washington federal judge Richard A. Jones regarding its case against Binance founder and former CEO Changpeng “CZ” Zhao.

According to the latest filing, the DOJ recommended that Judge Richard A. Jones sentence CZ to three years in prison and impose a $50 million fine for violating U.S. money laundering rules.

Prosecutors also argued that Zhao played a significant role in enabling Binance to violate the country's federal sanctions. However, lawyers representing CZ filed an objection hours later, stating that the former Binance executive should not be sentenced to jail time but rather probation.

DOJ seeks to increase prison sentence for Binance founder

In November 2023, Binance pleaded guilty to violating U.S. money laundering laws, resulting in the exchange agreeing to pay $4.3 billion as part of a settlement. In a similar development, CZ pleaded guilty to money laundering-related charges brought by the Department of Justice.

CZ initially faced 18 months in prison and a $50 million fine after reaching a plea agreement. He also resigned as CEO of Binance. However, the DOJ wants the prison sentence increased to 36 months (three years). They claim that CZ not only knew that Binance was violating money laundering regulations, but also encouraged such behavior.

Prosecutors allege that the Binance founders benefited enormously from the exchange’s violations of U.S. law. Therefore, they suggested that he pay a huge price for it.

By sentencing CZ to 3 years in prison and a $50 million fine, the DOJ claims that the court will indirectly send a strong warning to the Binance founder and potential violators around the world.

Notably, the DOJ stated that CZ failed to implement effective AML (anti-money laundering) protocols at Binance, thereby enabling bad actors to conduct illegal transactions through the largest crypto exchange by 24-hour trading volume.

Zhao Zhao's lawyer seeks probation

Instead, defense attorneys argued that their clients had no knowledge of any crime-related transactions on the platform.

The defense team argued that even though Binance’s compliance officers informed CZ that the exchange had users from U.S.-sanctioned countries, the exchange never banned users from those countries because Binance is a non-U.S. exchange.

Furthermore, CZ’s lawyers stressed that the charges to which Binance admitted stemmed from its machines automatically pairing users from US-sanctioned countries with other US customers.

However, they noted that these transactions represent only a small portion of Binance’s total trading volume. Therefore, CZ's attorney pleaded with Judge Richard A. Jones not to sentence his client to three years in prison. Instead, they urged Judge Richard A. Jones to sentence him to probation in detention at his home in Abu Dhabi.

Meanwhile, the Binance founder and more than 160 people, including his family and friends, have sent a letter to the judge asking for leniency.

A harsh sentencing for the former Binance CEO was initially scheduled for February 2024. However, the hearing was postponed to April 30 following an agreement between the two parties.

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