A federal court in Seattle is currently hearing the case of Changpeng Zhao (CZ), where U.S. authorities accuse the former head of Binance of money laundering and other illegal activities.
According to a transcript by CoinDesk journalists Danny Nelson and Nikhilesh De, the judge may reject the prosecution’s request for a harsher sentence for CZ, as there is no evidence he was aware of illegal activities at the cryptocurrency exchange he led.
Judge Richard Jones, agreeing with the prosecution, is considering a sentence of 10 to 16 months in prison and supervision from one to three years. He awaits opinions from the Department of Justice, the defense, and Zhao before making a final decision.
“We do not suggest that Mr. Zhao is Sam Bankman-Fried or that he is a monster,” emphasized a representative of the U.S. Department of Justice.
The department demands a “significant” prison sentence for CZ, arguing that a suspended sentence would “encourage others to break the law on the largest possible scale.”
A probation officer supported this recommendation, suggesting a five-month prison term. He stated that if Zhao is not imprisoned, he should be under house arrest in the U.S.
CZ’s defense opposes imprisonment, arguing that all factors favor a more lenient punishment.
The defense highlighted Zhao’s voluntary cooperation with U.S. authorities, suggesting a possible reduction of the sentence to five months.
After a short break, CZ was given the floor:
“The first step to accountability is full acknowledgment of mistakes,” emphasized the former head of Binance.
He added that he failed to establish effective KYC/AML procedures at Binance in time but had been striving to rectify this. Zhao also mentioned cooperation with the U.S. government.
“Everything I see in you and your personal qualities is mitigating,” noted the judge.
Initially, it was expected that the verdict for Changpeng Zhao would be announced on February 23, but the hearing was postponed for over two months. The prosecution had requested a 36-month prison sentence for the former head of Binance. Earlier, a 10-year term was discussed.
In November, Zhao pleaded guilty to failing to maintain an effective anti-money laundering program at Binance as the company’s head. As part of an agreement with the U.S. Department of Justice, he agreed to pay a $50 million fine and step down as CEO.
For Binance, the settlement amount was $4.3 billion.
The former CEO posted a $175 million bail to remain free until sentencing.
However, prosecutors demanded a travel ban for the former platform head, fearing his escape. They cited significant assets outside the country and minimal ties to the United States as risks.
Zhao’s lawyers contested the travel ban, but the court sided with law enforcement.
In December, the court denied the entrepreneur’s request to return home to the UAE, despite a proposed $4.5 billion bail.
“The defendant possesses vast wealth and property abroad and has no ties to the United States. His family resides in the UAE, and he appears to have privileged status. Under these circumstances, the court concludes that the defendant has not demonstrated his intentions to return,” wrote the judge in the order.
Richard Teng, the head of regional markets, succeeded Zhao as CEO of Binance.
Recently, CZ apologized to the judge in a letter for “poor decisions” and accepted “full responsibility” for his actions.