Changpeng Zhao, the head of Binance, the world’s biggest cryptocurrency exchange, may receive a three-year prison sentence based on the US Department of Justice’s (DOJ) recommendation. This comes after Zhao admitted to violating anti-money laundering (AML) regulations last year as required by the Bank Secrecy Act.
A “Message” To The Binance Founder And The World
In a harsh rebuke, the DOJ emphasized Zhao’s blatant disregard for American regulations in a stern sentencing memorandum. They brought attention to Zhao’s own statements, revealing his nonchalant attitude towards legal compliance: “It’s better to seek forgiveness than permission.” This mindset implied that Binance intentionally circumvented regulatory requirements to hasten growth and increase profits.
The Justice Department presented evidence against Zhao, explaining that his choices to disregard American laws were essential to Binance’s competitive approach, which aggressively courted US clients without fulfilling necessary legal obligations. According to the US Attorney’s Office, “Zhao deliberately broke US law. This was not an unintentional error or oversight. Instead, it was a calculated business move to draw in customers, expand his enterprise, and enrich himself.”
Based on the DOJ’s statement, Zhao facilitated Binance to run a cryptocurrency exchange resembling the Wild West, attracting questionable financial transactions. The memo points out that due to this, Zhao amassed great wealth and became a crypto industry icon. He wagered that he would avoid detection, and if caught, the penalties wouldn’t be as severe as his actions warranted.
The prosecution explained that because Zhao didn’t establish a robust Anti-Money Laundering (AML) system, Binance handled over $800 million in transactions that broke US sanctions against Iran and other countries, with an estimated total value of around $898 million.
In the sentencing memo, it is stressed that Zhao’s actions carried significant consequences. Specifically, it is pointed out that Zhao was aware that Binance would enable financial transactions between Americans and citizens from sanctioned countries like Iran and other restricted areas, all in violation of US legislation.
Based on the results of the investigation, the Department of Justice proposes a prison sentence longer than the recommended federal term for Zhao’s crime. The proposed 36-month sentence aims to emphasize the gravity of the offense, encourage adherence to the law, provide sufficient deterrence, and serve as appropriate retribution for Zhao’s wrongdoings.
Zhao’s sentencing is significant and could establish a new standard for crypto industry regulation, focusing on adherence to US financial laws. The consequences of this decision may ripple through the crypto community, possibly leading to changes in how exchanges comply with American regulations. The DOJ emphasized in their memorandum that Zhao’s sentence carries far-reaching implications: “This sentence serves as a warning not only to Zhao but also to others.”
The anticipated verdict on crypto investigations in the US, due on April 30, holds significant importance for the legal examination of cryptocurrency transactions.
At press time, BNB traded at $607.7.
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2024-04-24 13:41