Lawyers challenge motion to bar Changpeng Zhao from leaving the United States

Changpeng Zhao (CZ) and his team of lawyers подала возражение на ходатайство прокуроров о пересмотре его текущих условий освобождения. The gist is that the measures imposed are sufficient.

What should persuade the court?

On November 21, in the course of a deal with the U.S. Department of Justice the exchange decided to pay $4.3 billion, and CZ согласился to step down as chief executive and to pay a $50 million fine.

He внес залог в $175 млн to remain on bail until sentencing on February 23, 2024. However, prosecutors потребовали запретить the former head of the exchange leaving the United States, citing flight risk. They pointed to assets outside the country and minimal ties as risks.

In the defense’s response to the motion, the lawyers argued that “foreign citizenship is not equivalent to flight risk.” In their view, the government’s assumption that Zhao would not appear at sentencing should be rejected, as doing so could undermine the trust of his family and friends who guaranteed his release on bail.

The core of the objections is that the judge’s “tightly drafted and stringent” conditions provide a “sufficient guarantee” of CZ’s return to the United States. Additionally, the lawyers advanced arguments for the absence of flight risk by the entrepreneur:

• Zhao’s actions reflect his intent to take full responsibility and comply with the court’s decision;
• CZ is a public figure, has no criminal record and has pleaded guilty to a non‑violent offense not related to fraud;
• UAE citizenship does not entail flight risk.

In the filing, the lawyers also cited a statement by the former Binance CEO, made during the November 21 hearing:

«Your Honour, there is only one thing I want to say. I want to close this matter. Therefore I want to take responsibility and close this chapter in my life. […] Regarding the UAE matter – I was offered citizenship, I took it as an honour. I do not want to use this to say: ‘Hey, protect me.’ I do not want to use this. […] So I intend to return here and close this matter, otherwise I would not be here today».

Why Zhao Might Lose — Legal Expert’s View

Former SEC lawyer SEC John Reed Stark noted that U.S. District Judge Brian Cuchida deemed his decision ‘dangerous’. In his view, anyone who has appeared before this court has always faced flight risk.

Breaking News: 1) CZ Argues That He Should Be Allowed to Return To The UAE Until His Sentencing; And 2) CZ Plans To Argue For “No Jail Time” (Or, In The Alternative, A Few Months Of Prison Time Coupled With A Few Months of Home Detention)

As I predicted yesterday, the legal team… pic.twitter.com/akwiT7BXzD

— John Reed Stark (@JohnReedStark) November 24, 2023

However Stark noted that Judge Richard Jones could overturn the decision or strike a compromise and impose additional bail conditions.

«It is worth noting that the objection to the motion also provides a sense of the arguments that CZ’s lawyers plan to present at sentencing. In short, CZ’s lawyers will try to secure a no-prison outcome with a probation term»,

As reasons why such an outcome might be unlikely, Stark pointed out:

• Zhao’s close ties to the exchange — “whatever Binance did, it was at CZ’s direction and instruction”;
• difficulties implementing AML, financing of terrorism and sanctions-compliance programs, including those arising from the former head of the exchange;
• deliberate withholding by Binance of information “on more than 100 000 suspicious transactions”, linked to drugs, smuggling, fraud and other crimes, “specifically because of CZ”.

Stark believes the DOJ will take all possible steps to bring the former platform CEO to account.

«As Binance’s CEO, Zhao deliberately committed a number of appalling crimes and abhorrent terrorist acts, and he must face the consequences»,

He called it a ‘mockery’ if CZ, in attempting to atone for his crimes, were to face a $50 million fine and a period of home detention.

«In short, the prosecutions of CZ/Binance should be aimed solely at holding them to account»,

Community Reaction

CoinGeek founder Calvin Ayre, responding to Stark’s post, said that Binance “is part of a global cartel of exchanges and platforms, including Eth and others, that organise market manipulation across the industry to rob their own clients in addition to other crimes”.

Binance is part of a global cartel of exchanges and platforms that includes Eth and others that organize industry wide market manipulation to rob their own clients in addition to the other crimes…that is a Fraud and this is not even mentioned in this….so its a lie to say he…

— Calvin Ayre (@CalvinAyre) November 24, 2023

One commenter noted that if CZ were a US citizen, ‘he would have got off totally scot-free just like all the US banks and their officers have got off scot-free for the same criminal offences for over the past 50 years’.

In short. If CZ was an American citizen then he would have got off totally scot-free just like all the US banks and their officers have got off scot-free for the same criminal offences for over the past 50 years. There was no need for any US banks to plea for leniency as no…

— Allan Endresz (@EndreszAllan) November 24, 2023

A similar sentiment was expressed by another X user:

«JP Morgan regularly manipulates the securities market, pays millions in fines, and no one ever goes to prison. I am not a fan of CZ, but I do not think there should be double standards».

Those reacting to the former SEC lawyer’s post included supporters as well.

If he didn’t want to be there, he wouldn’t be there. I’m inclined to believe him.

— nmuk (@nmuk) November 24, 2023

«If he [Zhao] didn’t want to be there, he wouldn’t be there. I’m inclined to believe him»,

As noted, after Zhao’s departure, Richard Teng took over as Binance’s CEO.

In a special feature for ForkLog, ForkLog studied the experience of the new head of the exchange and looked into how former colleagues assess the platform’s prospects under his leadership.