Experts Weigh Potential Sentence for Former Binance CEO

A court hearing is scheduled for April 30, where the punishment for Changpeng Zhao (CZ), the founder and former CEO of the cryptocurrency exchange Binance, will be determined. In a discussion with Cointelegraph, lawyers and politicians explored possible outcomes.

Charges

The former CEO of the trading platform will appear before a judge nearly six months after admitting guilt to violating the Bank Secrecy Act due to failing to maintain an effective anti-money laundering program at Binance.

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. The settlement amount for the exchange itself was $4.3 billion.

Under sentencing guidelines, the judge could impose a 10-year prison sentence on Zhao, given the severity of the charge. However, CZ admitted guilt to only one count, which suggests a sentence ranging from 12 to 18 months.

At the end of March, the founder of the collapsed FTX, Sam Bankman-Fried, was sentenced to 25 years in prison for money laundering, fraud, and conspiracy. Experts noted the differences between the cases of the two exchange leaders.

“I would say that [these cases] are incomparable in terms of charges, but they are extremely similar in terms of the Department of Justice, the SEC, and the federal government. They make it clear that they will not tolerate heinous crimes and behavior,” said Mo Vela, former director of the Joe Biden administration.

In his view, U.S. authorities may be trying to “send a message” to lawbreakers in the crypto industry, regardless of the severity of CZ’s sentence. Vela also suggested “some leniency” towards Zhao for his cooperation and admission of guilt.

Potential Concerns

Former U.S. Assistant Attorney for the Eastern District of New York, Mark Bini, added that unlike Bankman-Fried’s criminal case, Zhao’s situation more “resembles a regulatory violation.”

However, he believes there is a risk that events surrounding the Hamas attack on Israel could influence the judge in sentencing CZ.

According to media reports, since December 2021, Israeli authorities have blocked 189 accounts on the Binance exchange, allegedly linked to illegal groups. Since October 7, the cryptocurrency exchange has closed over 100 accounts related to financing Palestinian terrorists at the authorities’ request.

Bini noted that the charges against CZ also include laundering funds connected to Hamas. If prosecutors emphasize this issue, public opinion may not favor Binance and its founder:

“Something like this can be presented in such a way as to highlight the real consequences of serious regulatory violations [by cryptocurrency exchanges], which prosecutors believe should be considered. […] If the facts are compelling enough for the judge in a negative sense for CZ, he may see the need for a harsher sentence.”

Before sentencing, Zhao remains free, having posted a $175 million bail. However, prosecutors have sought to ban the former platform head from leaving the U.S., fearing he might flee. 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.

In April, Forbes estimated CZ’s wealth at $33 billion, placing him 50th in the billionaire rankings.

Richard Teng, the head of regional markets, succeeded Zhao as CEO of Binance.